New Delhi: The International Monetary Fund (IMF) has kept India‘s growth rate at 7% for the financial year 2024-25. This is similar to the July estimate. IMF says that the decline in demand during the pandemic is going away. The economy is coming back to its potential. The biggest thing is that IMF has estimated the inflation rate in India to be 4.4% in 2024-25. Next year it will fall to 4.1%. Also, India’s per capita production is estimated to increase by 6% in the financial year 2024-25. This is more than Brazil (2.6%), Russia (3.8%), China (4.9%) and America (2.3%). IMF’s latest assessment is 0.2 percent more than the April estimate. The projection for FY 2025-26 is 6.5%. This estimate is higher than that of developed and emerging economies. The global economy is expected to slow to 3.2% in 2024, from 3.3% a year earlier.
What does IMF’s outlook say?
According to the World Economic Outlook released on October 22, ‘GDP growth rate in India is expected to slow down from 8.2 percent in 2023 to 7 percent in 2024 and 6.5 percent in 2025. This is because the demand accumulated during the pandemic has dissipated as the economy has reconnected with its capacity.
The Reserve Bank of India had earlier this month projected a growth rate of 7.2% due to strong domestic demand. The World Bank has also projected a growth of 7% in India for the financial year 2024-25.
The IMF report has predicted a slight decline in China’s growth to 4.8%. This is due to better than expected net exports despite challenges in the real estate sector and low consumer confidence.
Work will come quickly in India
On the other hand, the economic output of Brazil and Russia has been revised up to 3% and 3.6% for 2024. It has also increased to 2.8% for America. According to an IMF blog, ‘The growth outlook in emerging markets and developing economies is very stable.’
Emerging Asia includes China, India, Indonesia, Malaysia, Philippines, Thailand and Vietnam. According to the IMF’s outlook, manufacturing production is shifting to emerging market economies, especially China and India. The reason is that developed economies are losing competitiveness.