India Remains World’s Fastest Growing Economy, Says IMF

Amid the geopolitical crisis around the globe and economic slowdown, the International Monetary Fund (IMF) in a report has said that India remains the world’s fastest-growing major economy. In its regional economic outlook for 2024, the global body reconfirmed India's economic leadership among the emerging Asian economies and across Asia. 

The IMF stated that growth in 2024 for India has been revised up by 0.2 percentage points to 7.0 per cent relative to the April forecast, as rural consumption is benefiting from an improved agricultural season, and as public infrastructure investment continues to expand. 

It added, “These trends are expected to continue in 2025. With this, India remains the world’s fastest-growing major economy.” It also expects Asia and the Pacific region to contribute 60 per cent of the global growth in the year 2024.

The short-term prospects for Asia and the Pacific have improved slightly compared to the IMF’s April forecasts, even though growth is still expected to moderate in 2024 and 2025. The regional growth projection for 2024 has been marked up to 4.6 percent from 4.5 percent in April, largely reflecting the overperformance in the first half of the year. The region is forecast to contribute roughly 60 percent to global growth in 2024.

In 2025, more accommodative monetary conditions are expected to support activity, resulting in a slight upward growth revision to 4.4 percent from 4.3 percent in April. Inflation has retreated in much of the region. 

At the same time, risks have increased, reflecting rising geopolitical tensions, uncertainty about the strength of global demand and potential for financial volatility. IMF added, “Demographic change will act increasingly as a brake on activity, though structural shifts into high-productivity sectors such as tradable services hold promise to sustain robust growth.”

Earlier in October, the IMF retained its growth rate projects for India in its latest World Economic Outlook (WEO) and expected India to grow at 7 per cent in the current fiscal year ending 31 March 2025 and 6.5 per cent in the next fiscal year (FY2025-26).

"In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential," the IMF said.

Looking beyond the one-year outlook, the global economy faces a feeble period of medium-term growth, the IMF said as it called for a slate of reforms in its latest WEO during the annual meetings of the fund and the World Bank in Washington.

The IMF in its update raised the growth rate for the US in 2024 while holding overall global growth steady. For the US, the forecast for growth this year was increased to 2.8 per cent from 2.6 per cent in its July estimate while also raising the 2025 projection to 2.2 per cent from 1.9 per cent. Global growth remained at 3.2 per cent this year and next. The growth rate for China was reduced to 4.8 per cent from 5 per cent previously but remained unchanged at 4.5 per cent for 2025.