India’s economic growth has slowed more than expected, driven by a sharper-than-expected decline in industrial activity. The International Monetary Fund’s latest World Economic Outlook update says the country’s growth rate, which was 8.2% in 2023, is projected to decelerate to 6.5% in 2024 and remain steady at that rate through 2026.
The International Monetary Fund (IMF) highlighted that industrial activity was a key factor behind the unexpected slowdown. Despite this, India’s growth outlook remains solid, with projections of 6.5% growth in both 2025 and 2026, in line with the country’s potential.
On a global scale, the IMF expects global economic growth to hold steady but remain subdued, with a growth forecast of 3.3% for both 2025 and 2026. This is slightly below the historical average of 3.7% between 2000 and 2019. The IMF’s updated forecast for 2025 largely reflects an upward revision for the United States, which offsets downward adjustments for other major economies.
Global inflation also continues to move downward. According to the IMF, global headline inflation is seen to decline further to 4.2% in 2025 and 3.5% in 2026, back to target more quickly in the advanced economies compared with emerging markets and developing economies.
In the US, strong underlying demand, driven by wealth effects, a less-constrained monetary policy, and favorable financial conditions, is expected to support economic growth at 2.7% in 2025.
For China, the IMF revised the growth forecast upward to 4.5% in 2024, up by 0.4 percentage points from the earlier projection.
Pierre-Olivier Gourinchas, Chief Economist of the International Monetary Fund, said global disinflation would contribute to a relief from disruptions created by the spate of recent global crises – the pandemic of COVID-19 and war in Ukraine which spurred the sharpest inflation spurt in forty years.
Overall, global growth is expected to be relatively stable, though lackluster, and India’s economy is likely to follow this subdued trajectory despite a solid 6.5% growth rate in the coming years.
With inputs from PTI.