The World Economic Outlook report has retained the global growth projection at 3.2% for this year, but projected a faster pace of expansion in emerging markets and developing countries driven by India and China, which is projected to grow 5%, compared with 4.6% earlier.
“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, largely because of waning momentum in emerging Asia. By 2029, growth in China is projected to moderate to 3.3%, well below its current pace,” it said. While the Indian economy is projected to grow slower than the 8.2% during the last financial year, it will remain the fastest-growing major economy, not just this fiscal year but even in FY26.
IMF’s projections are in line with govt’s estimates but lower than RBI’s revised forecast of 7.2% for the current financial year. Govt may revise its projections when FM Nirmala Sitharaman presents her seventh straight Budget next week. Besides, the Economic Survey – which will be tabled in Parliament ahead of the Budget – will provide a forecast. In recent years, the finance ministry’s estimates have been more conservative than RBI’s.
IMF also warned that momentum in the fight against inflation is slowing, which could further delay an easing of interest rates and keep up strong dollar pressure on developing economies.
It also cautioned of near-term upside risks to inflation as services prices remain elevated amid wage growth in the labour-intensive sector.
