The International Monetary Fund (IMF) has raised India's FY24 economic growth forecast to 6.3%, a 20 basis points increase from the previous estimate, according to the IMF's World Economic Outlook (WEO) published on Tuesday. This adjustment is attributed to a surge in consumption demand within the country, despite the geopolitical uncertainties brought on by the Israel-Hamas conflict. The forecast for FY25 remains steady at 6.3%.
In comparison, S&P Global (NYSE:SPGI) Ratings' estimate for India's economic growth was more conservative at 6%. However, it's noteworthy that India accounts for a significant 12.5% share in emerging markets. The World Bank has maintained its projection for India's growth at 6.3%, slightly lower than the Indian government and Reserve Bank's estimate of 6.5%.
The IMF's WEO also revealed downgraded growth forecasts for China and the euro area, contrasting with the "remarkable strength" of the U.S. economy. Despite these adjustments, the global GDP prediction for 2023 remains at 3.0%. However, the outlook for 2024 has been reduced to 2.9%, a decrease from the July forecast.
Pierre-Olivier Gourinchas, IMF's chief economist, explained that recovery from COVID-19, Russia's invasion of Ukraine, and last year's energy crisis continues, but with divergent global growth trends and mediocre medium-term growth prospects. Risks such as China's real estate crisis, a resurgence of inflation, volatile commodity prices, and geopolitical fragmentation were highlighted in his discussion. However, a soft landing is generally anticipated.
The overall global growth remains low and uneven with a world output increase of merely 3.5% in 2022. This shows that while some economies are experiencing robust recovery, others are lagging due to various factors including the ongoing pandemic, geopolitical tensions, and economic crises.
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