IMF raises India FY24 GDP growth forecast by 20 basis points to 6.3%
New Delhi, Oct 10, 2023
Agency keeps global growth forecast unchanged at 3% for 2023, says economic activity still 'short of pre-pandemic path'
The International Monetary Fund (IMF) on Tuesday raised its FY24 growth projection for India by 20 basis points to 6.3 per cent, citing stronger-than-expected consumption between April and June.
The IMF’s latest World Economic Outlook (WEO) kept its global growth forecast unchanged at 3 per cent for 2023 while paring down the 2024 projection by 10 basis points to 2.9 per cent.
“Growth in India is projected to remain strong, at 6.3 per cent in both 2023 (FY24) and 2024 (FY25), with an upward revision of 0.2 percentage point for 2023 (FY24), reflecting stronger-than-expected consumption during April-June,” said IMF.
In its July WEO, the IMF had projected a growth rate of 6.1 per cent for India in FY24, a 0.2 percentage point upward revision compared with the April projection driven by strong domestic investment.
Earlier this month, the World Bank too said its economic growth forecast for India remains at 6.3 per cent, underpinned by strong investment growth.
Both the finance ministry and Reserve Bank of India (RBI) have retained their 6.5 per cent GDP growth estimate for FY24.
On inflation, the IMF report said that monetary policy projections are consistent with achieving the RBI’s inflation target over the medium term.
In the monetary policy review last week, RBI Governor Shaktikanta Das said headwinds from geopolitical tensions and geoeconomic fragmentation, volatility in global financial markets, global economic slowdown, and uneven monsoon pose risks to economic outlook.
“Economic activity still falls short of its pre-pandemic path, especially in emerging markets and developing economies, and there are widening divergences among regions,” the IMF said.
It said that several forces are holding back the recovery as a result of the long-term consequences of the pandemic, the war in Ukraine, and increasing geoeconomic fragmentation.
The IMF report comes in the backdrop of the ongoing conflict between Israel and Hamas. Economists said that if the war between Israel and Hamas continued and countries such as the US and Saudi Arabia took sides then oil prices could come under pressure.
The IMF’s report took note of the increase in Russian oil shipments to countries such as India, China, Turkey and the UAE post its invasion of Ukraine.
The report said that about 35 to 40 per cent of India’s crude oil imports came from Russia during April–June 2023, a stark rise from less than 5 percent before the war in Ukraine. “While India’s oil exports (mostly petroleum products) are small relative to its oil imports (mostly crude oil), India increased its oil exports to the European Union substantially,” the WEO said.
[The Business Standard]
