IMF Set to Upgrade India's Growth Forecast After Strong Q3 Data

Responding to a question on India's growth outlook for 2025, IMF Communications Department Director Julie Kozack said India continues to anchor global expansion even as uncertainty clouds the broader international economic environment.

"What we have seen in India is that India is a key growth engine for the world," Kozack told reporters at a press conference here.

She said the IMF's most recent assessment, conducted as part of its Article IV Staff Report, projected India's growth for the 2025-26 fiscal year at 6.6 per cent, with strong domestic consumption forming the backbone of that estimate.

"For India, you asked about growth in 2025," Kozack said. "When we did our Article IV Staff Report, we had estimated growth for fiscal year 2025-26 at 6.6 percent, which is based on strong consumption growth."

Kozack noted that subsequent economic data have strengthened IMF's confidence in India's performance, particularly the third-quarter numbers.

"What we have seen since then is that the third-quarter growth in India came out stronger than expected," she said.

That development, she added, has raised the likelihood of an upward revision in the Fund's next forecast update.

"And that makes it likely that we will be upgrading our forecast going forward," Kozack said.

The IMF is scheduled to release its January update of the World Economic Outlook (WEO) in the coming days, which will include revised projections for India and other major economies.

"We have our January WEO update coming in the next few days," Kozack said. "So we will have a revised growth number for India at that time."

While she did not disclose the revised figure ahead of the update, Kozack emphasised that the Fund's assessment of India remains firmly positive.

"But I think the bottom line for us on India is that it has been a key driver of global growth, and growth has been quite robust in India," she said.

Economists say the IMF's signal is notable given the fragile global backdrop. Anit Mukherjee, Senior Fellow at ORF America, said the Fund's remarks underline India's resilience at a time when many economies are grappling with uncertainty.

"I think it's very good news for the Indian economy and the global growth also because India is one of the biggest contributors to global growth right now," Mukherjee told IANS.

He pointed to a challenging external environment marked by policy and trade-related risks. "Given the very difficult external situation, the uncertainty over tariffs, there is a lot of issues regarding central bank independence," he said, adding that these factors are "creating uncertainty in the global economy."

Despite those headwinds, Mukherjee said India has continued to perform strongly. "Even in spite of the tariff shock that we had in April and then again June, the resilience of the economy and not only resilience, but that IMF is projecting a higher growth than they're projecting for is something which is quite remarkable," he said.

Mukherjee said upward revisions by the IMF are uncommon in the current climate. "It sometimes does, but it is rare and it is surprising because how the external situation, how the global economy is today," he said. "So that is why this is very surprising and pleasantly so from an Indian perspective."

He attributed India's stronger performance to domestic factors, especially consumption. "One of the key drivers of this growth is domestic consumption," Mukherjee said, linking it to policy steps taken ahead of the festive season.

"That has been due to the reduction in the GST right before the holiday season," he said, noting that "therefore you see the third quarter GDP numbers coming up very significantly."

Mukherjee also cited macroeconomic discipline. "The second issue... is also the moderate inflation in the Indian economy and the fiscal consolidation," he said, adding that the government has avoided large investments without "taking into account fiscal stability."

- IANS