The International Monetary Fund (IMF) on Tuesday raised India’s GDP growth forecast for 2024-25 to 7 per cent from 6.8 per cent projected earlier on the back of “improving private consumption, particularly in rural India”.

“The forecast for growth in India has also been revised upward, to 7 per cent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” the IMF said in its World Economic Outlook report.

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The IMF has left unchanged its estimate for India’s economic growth for 2025-26 at 6.5 per cent.

“Growth in India and China will account for almost half of global growth in 2024. Growth in major advanced economies is more aligned: Euro area growth picks up as the US shows signs of cooling after a strong year,” said Gita Gopinath, IMF’s First Deputy Managing Director.

The IMF World Economic Outlook put China’s growth rate at 5 per cent for 2024 and 4.5 per cent for 2025.

In the case of advanced countries, the GDP growth rate of the US has been forecast at 2.6 per cent for 2024 and 1.9 per cent for 2025.

Japan is expected to grow at 0.7 per cent in 2024 and improve to 1 per cent in 2025. The GDP growth for the Euro area has been forecast at 0.9 per cent in 2024 which is expected to accelerate to 1.5 per cent in 2025.

Global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast at 3.2 per cent in 2024 and 3.3 per cent in 2025.

“Services inflation is holding up progress on disinflation, which is complicating monetary policy normalisation. Upside risks to inflation have thus increased, raising the prospect of higher for even longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. The policy mix should thus be sequenced carefully to achieve price stability and replenish diminished buffers,” the IMF report stated.