With a growing working-age population and strong domestic demand, the International Monetary Fund (IMF) recently revised upward India’s growth prediction to 6.8% for 2024 in the April edition of the 2024 World Economic Outlook Report.
India’s Growth Projection
- The Indian economy is expected to increase by 6.8% in 2024, according to the IMF’s revised forecast, which was 6.5% in January.
- Continued economic Momentum: A growing working-age population and solid domestic demand fuel India’s continued high economic trajectory.
- In contrast to China, which is expected to grow at a rate of 4.6% during the same period, India is growing faster.
- Estimates for inflation were 4.6% for this year and 4.2% for 2025.
Global Trend
- Emerging and Developing Asia: Growth in this region is predicted to moderately increase from prior projections, falling from 5.6% in 2023 to 5.2% in 2024 and 4.9% in 2025.
- China’s Slowdown: Due to factors like weakening post-pandemic demand and problems in the real estate industry, China’s growth is predicted to decline from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025.
About IMF
- In the wake of the Bretton Woods Agreement, the IMF was founded in 1944.
- Primary objective: International economic coordination is needed to prevent competing currencies from devaluing and to boost exports.
- In due course, it became a lender of last resort for governments facing serious currency difficulties.
- Membership: 190 nations make up its membership.
- It is headquartered in Washington, D.C.
- Functions:
- The IMF encourages international cooperation and global monetary stability to avert financial crises.
- Financial assistance is provided, frequently with requirements to enhance the members’ economic well-being, in the form of loans and other financial support.
- The IMF guides policies to promote stability and growth while examining economic changes.
- Technical support: It offers knowledge and instruction in financial regulation and monetary and fiscal policy.
- Analyses and Research: The IM examines various economic topics, such as the fight against poverty and worldwide economic trends.
- IMF reports
- Global Financial Stability Report.
- Global Economic Outlook.
Key Highlights
- Forecast from the Reserve Bank of India: The RBI has projected a 7% growth rate for FY24, while the IMF’s forecast is less than that.
- FY25 Projection: The IMF also increased its earlier 6.1% growth prediction for FY25 to 6.5%.
- IMF’s Medium-Term GDP Growth Revision: The current PLFS report indicates that robust public investment, positive labour market outcomes, and model modifications have led to the IMF revising India’s medium-term (potential) GDP growth to 6.5%.
- It is anticipated that by 2027–2028, India’s GDP will have grown to $5 trillion, making it the world’s third largest.
- Despite rising pressures, tighter regulations, and volatile markets, the IMF has revised its global growth prediction for 2023 to 3.1%, more substantial than it had previously predicted.
- According to the IMF, the US economy will increase by 2.1% in 2024, more than the previous estimate.
Outlook for the Global Economy
- Steady Growth: It is anticipated that global growth, which was forecast to be 3.2% in 2023, will maintain its current rate in 2024 and 2025.
- Resilience among Difficulties: The world economy has demonstrated resilience, with sustained growth and falling inflation, despite difficulties, including supply chain interruptions and the conflict between Russia and Ukraine.
- Prioritising Economic Resilience: To improve economic resilience, policymakers are advised to concentrate on bolstering public finances and reviving chances for economic growth.
