IMF predicts India’s GDP growth to be 7% in 2024, 6.5% in 2025 as pent-up demand fades

India’s GDP is expected to grow 7 per cent in 2024, and 6.5 per cent in 2025, the International Monetary Fund (IMF) said on Tuesday (Octoebr 22). In 2023, the country’s economy grew 8.2 per cent.

This slowdown in GDP growth is expected as the pent-up demand accumulated during the COVID-19 pandemic has been exhausted and the economy is now reconnecting with its potential.

“In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential,” the IMF said in the World Economic Outlook.

According to the latest Economic Survey, which was presented in July ahead of the full budget, India’s GDP growth in financial year 2024-25 is expected to moderate to 6.5-7 per cent, down from 8.2 per cent in 2023-24.

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Globally, the IMF noted that the fight against inflation has seen significant progress, although price pressures continue in certain countries.

After peaking at 9.4 per cent year-over-year in the third quarter of 2022, headline inflation rates are projected to drop to 3.5 per cent by the end of 2025, falling below the 2000-2019 average of 3.6 per cent, the IMF said.

The annual World Economic Outlook, released at the IMF’s headquarters, forecasted global economic growth to remain steady at 3.2 per cent in 2024 and 2025.

IMF Chief Economist Pierre-Olivier Gourinchas said, “Growth is projected to hold steady at 3.2 per cent in 2024 and 2025, but some low-income and developing economies have seen sizable downside growth revisions, often tied to intensifying conflicts,” he said.

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Growth in emerging markets and developing economies is expected to remain stable at around 4.2 per cent this year and in 2024, led by strong performance in emerging Asia, the IMF said.

US economic growth remains strong, reaching 2.8 per cent this year, but is expected to return to its potential by 2025.

Advanced European economies are projected to experience a modest rebound in growth next year, with output reaching close to potential levels.

With inputs from agencies