IMF sees India’s GDP growth slowing from 7% in 2024 to 6.5% in 2025

India’s economy in terms of Gross Domestic Product (GDP) is expected to grow at a slower pace of 7 per cent in the current year, ie, 2024 against the 8.2 per cent growth recorded in 2023. GDP growth will fall further to 6.5 per cent in 2025 as demand slows, according to the World Economic Outlook (WEO) published by the International Monetary Fund (IMF).

The latest edition of the World Economic Outlook projects global economic growth remaining steady at 3.2 per cent for both 2024 and 2025.

The report raised the 2024 growth for the US economy to 2.8 per cent against the 2.6 per cent earlier forecast and to 2.2 per cent in 2025 against the July estimate of 1.9 per cent.

The IMF report however, lowered China’s growth forecast for 2024 to 4.8 per cent from 5 per cent, while keeping the 2025 growth projection unchanged at 4.5 per cent.

For advanced European economies, the IMF report projects a modest increase in growth next year, with near potential output. 

Growth in the emerging markets and developing economies is expected average around 4.2 per cent for 2024 and 20215, with robust performance by most Asian economies.

Disruptions to production and shipping of commodities, especially oil, caused by wars, civil unrest, and extreme weather conditions have led to downward revisions to the outlook for the Middle East and Central Asia and that for sub-Saharan Africa.

According to the report, the economic shocks resulting from the demand pressures and supply disruptions caused by the pandemic and later the war in Ukraine has led to a realignment of the demand-supply curve.

Inflation in India has been projected to hover around 4.4 per cent this year and 4.1 per cent next year.

The report says disinflation has been supported by the unwinding of the shocks, improvements in labour supply and immigration and monetary policy interventions.

However, there are still serious risks to supplies that can result in demand pressures while competitive monetary policy actions could affect global financial flows, says the report.