International Monetary Fund Raises India's Economic Growth Forecast for FY24 Amid Stronger Momentum

The International Monetary Fund (IMF) has increased its prediction for India's economic growth in the fiscal year 2024. They now expect the economy to grow by 6.1%, which is a slight improvement from their previous forecast in April. This upward revision is due to the country's stronger-than-expected growth in the last quarter of the fiscal year 2023, mainly driven by increased domestic investment.

The Indian economy expanded by 6.1% in the March quarter of the fiscal year 2023, surpassing the expectations of analysts. This growth was boosted by the manufacturing and construction sectors, which performed better than anticipated.

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Many experts predict that India's economy will continue to grow between 6% and 6.5% in the fiscal year 2024. The OECD raised its forecast to 6%, while the Reserve Bank of India expects a 6.5% expansion in the same period. India remains a robustly growing economy and is a significant contributor to global growth this year.

The IMF also noted that inflation in India is expected to stay within the target range of 2-6%. They forecast an inflation rate of 4.9% for the fiscal year 2024, and they emphasized the need to manage inflation and output levels effectively.

Regarding India's decision to ban the export of non-basmati white rice, the IMF expressed concerns that such restrictions could lead to food price volatility globally and may trigger retaliatory measures from other countries. They encouraged the removal of export restrictions to avoid potential harm to the global economy.

IMF's Forecast for other Countries

The IMF also revised its global growth outlook for 2023, raising it by 20 basis points to 3%. The US and UK experienced upward revisions of 20 basis points and 70 basis points, respectively, while Germany was the only major economy facing a contraction. The IMF warned of the risks posed by inflation and potential shocks, such as the war in Ukraine and extreme weather events, which could lead to restrictive monetary policies.

Regarding China, the IMF maintained its growth projection for 2023 at 5.2%. However, they noted that the Chinese economy's recovery was losing momentum due to factors like weakness in the real estate sector, low foreign demand, and high youth unemployment.

Finally, the IMF expected the US Federal Reserve to raise interest rates more than initially anticipated in April 2023, reaching a peak of about 5.6% before reducing them in 2024.