IMF raises India's FY24 GDP growth forecast by 20 bps to 6.3%

India's economic growth forecast for FY24 has been revised to 6.3% from 6.1% earlier, the International Monetary Fund said in its October 2023 World Economic Outlook report that was released on Tuesday.

The global lender expects retail inflation of India to rise to 5.5 in FY24 before easing to 4.6% in FY25.

“Growth in India is projected to remain strong, at 6.3% 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.

The Reserve Bank of India has projected consumer price index (CPI)-based inflation for the current fiscal year at 5.4% while GDP growth is seen at 6.5%.

Monetary policy projections are consistent with achieving the Indian central bank's inflation target over the medium term, the IMF said.

The country's current account deficit is expected to remain at 1.8% of GDP in FY24 and FY25, the IMF added.

Both the finance ministry and Reserve Bank of India (RBI) have retained their 6.5% GDP growth estimate for FY24.

The International Monetary Fund on Tuesday cut its growth forecasts for China and the euro area and said overall global growth remained low and uneven despite what it called the "remarkable strength" of the US economy.

The IMF left its forecast for global real GDP growth in 2023 unchanged at 3.0% in its latest World Economic Outlook (WEO), but cut its 2024 forecast by 0.1 percentage point to 2.9% from its July forecast. World output grew 3.5% in 2022.

IMF chief economist Pierre-Olivier Gourinchas told reporters the global economy continued to recover from the COVID-19 pandemic, Russia's invasion of Ukraine and last year's energy crisis, but growth trends were increasingly divergent across the globe, and prospects for medium-term growth were "mediocre."

Gourinchas said the forecasts generally pointed to a soft landing, but the IMF remained concerned about risks related to the real estate crisis in China, volatile commodity prices, geopolitical fragmentation, and a resurgence in inflation.

A fresh unexpected risk emerged in the form of the Israel-Palestinian conflict just as finance officials from 190 countries gathered in Marrakech for the annual meetings of the International Monetary Fund and World Bank, but came after the IMF's quarterly outlook update was locked down on Sept. 26.