IMF Revises India’s 2023 GDP Growth Forecast To 6.3%; Downgrades China & Euro Area

New Delhi: The International Monetary Fund (IMF) has revised India’s economic growth forecast for the current fiscal year to 6.3% from 6.1%.

“Growth in India is projected to remain strong, at 6.3% in both 2023 and 2024, with an upward revision of 0.2 percentage points for 2023, reflecting stronger-than-expected consumption during April-June,” the IMF said in its October 2023 World Economic Outlook report released on Tuesday.

The Reserve Bank of India has projected consumer price index (CPI)-based inflation for the current fiscal year at 5.4% and GDP growth at 6.5%.

The IMF, on the other hand, has cut its growth forecasts for China and the euro area, saying overall global growth remained low and uneven despite the “remarkable strength” of the US economy. While forecast for global real GDP growth in 2023 has been left unchanged at 3%, the 2024 forecast has been cut by 0.1 percentage point to 2.9%.

IMF chief economist Pierre-Olivier Gourinchas said that the likelihood of a “soft landing,” with inflation coming down without a major economic downturn, has increased, but global growth forecast is at its lowest in decades. Growth will slow down from 3.5% in 2022 to 3.0% in 2023 and 2.9% in 2024.

“While some extreme risks to economic growth, such as severe banking instability, have eased since April, other risks like intensification of China’s property stress, volatile commodity prices, near-term inflation expectations remain. China’s property sector stress could intensify, posing a complex policy challenge. If property prices fall too rapidly, bank and household balance sheets will deteriorate, with potentially severe financial consequences,” he said.

The IMF chief economist further said that all countries should avoid geo-economic fragmentation that impedes progress toward shared prosperity. Instead, they should work to restore confidence in rules-based multilateral frameworks that enhance transparency and policy certainty. “Even as countries make progress on attaining their inflation targets, central banks should be careful not to ease rates too forcefully, according to our new GFSR. Policymakers also need to continue monitoring the real estate sector as it experiences rising defaults,” he added.

IMF Growth Forecast for other Major Economies in 2024