The International Monetary Fund (IMF) has upgraded its economic forecast for India for 2024, while warning that global growth will remain lackluster.
India, previously dubbed by the IMF as “the world’s fastest-growing major economy,” is now expected to grow by 7% in 2024, up from April’s projection of 6.8%. This increase is largely attributed to improvements in private consumption, particularly in rural areas, according to the report.
Despite this positive outlook, growth is expected to decline to 6.5% in 2025, following an 8.2% growth rate in the fiscal year from April 2023 to March 2024. The world’s most populous country, which Goldman Sachs predicts will become the world’s second-largest economy by 2075, has been attracting significant investment from tech giants like Apple and Google as it strives to become a manufacturing powerhouse.
“Asia’s emerging market economies remain the main engine for the global economy. Growth in India and China is revised upwards and accounts for almost half of global growth. Yet prospects for the next five years remain weak,” said Pierre-Olivier Gourinchas, the IMF’s chief economist.
Expectations for China China’s economy is projected to grow by 5% this year, consistent with the IMF’s May prediction and higher than the 4.6% projection in April. However, this is still lower than the 5.2% expansion seen in 2023. GDP growth in China is expected to slow to 4.5% in 2025 and continue on a downward trajectory to 3.3% by 2029, according to the IMF’s latest World Economic Outlook in July.
Ahead of the IMF’s report on Tuesday, Chinese official data showed its economy grew by 4.7% year-on-year in the second quarter, falling short of the 5.1% growth expected by economists polled by Reuters.
The IMF remains optimistic about a return of consumption in China over the next few years, but falling birth rates are expected to hinder productivity levels and slow economic growth.
Global Growth Projections Global growth for 2024 is expected to be 3.2%, unchanged from the IMF’s April forecast, and is projected to increase slightly to 3.3% in 2025.
The U.S. economy is expected to grow by 2.6% this year, slightly lower than the 2.7% projection in April. The inflation rate in the U.S. is easing, falling to 3% in June from 3.3% in May. Federal Reserve Chair Jerome Powell indicated on Monday that the central bank will not wait for inflation to reach 2% before cutting interest rates, and he downplayed the likelihood of a “hard landing” for the economy. However, he emphasized that U.S. public debt remains a significant concern.
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Growth in the eurozone has been upgraded to 0.9% for this year, 0.1 percentage point higher than April’s projections, driven by stronger services momentum and higher-than-expected net exports in the first half of 2024. The region’s growth is expected to rise to 1.5% in 2025, supported by increasing real wages and more investments, the IMF said.
