The IMF also highlighted potential risks to the global economy, including persistent inflation, trade tensions, and increased policy uncertainty.
In Asia, China and India are expected to be the main drivers of growth, with China’s forecast revised upward to 5.0% in 2024 due to a rebound in private consumption and strong exports. However, the IMF cautioned that China faces risks stemming from weak confidence and unresolved property sector problems, which could lead to a greater reliance on the external sector.
The IMF has revised its growth projection for India’s economy in the 2024-25 financial year, increasing it from 6.8 per cent to 7 per cent.
The upward adjustment is attributed to the anticipated improvement in private consumption, especially in rural areas of the country.
For the 2025-26 fiscal year, the IMF maintained its previous estimate of 6.5 per cent growth in India’s gross domestic product (GDP). This projection remains unchanged from the earlier forecast.
In April, the IMF had raised its forecast for India’s GDP growth from 6.5 per cent to 6.8 per cent for the 2024-25 financial year. The current revision further boosts the growth outlook, highlighting the resilience and potential of the Indian economy.
The IMF emphasized the importance of careful monetary policy adjustments to address the risks of sticky inflation, which could be exacerbated by renewed trade or geopolitical tensions. Higher inflation could also increase the likelihood of interest rates remaining elevated for longer, leading to increased financial risks.
The organization warned that a resurgence of tariffs could trigger retaliation and a “costly race to the bottom.” Additionally, the IMF noted that significant swings in economic policy resulting from elections this year could have negative spillovers to the rest of the world.
(With inputs from agencies)