(MENAFN- KNN India)
New Delhi, Jan 18 (KNN)
The International Monetary Fund has reaffirmed its growth projection for India at 6.5 percent for both fiscal years 2026 and 2027, stating this estimate aligns with the country's potential.
This forecast comes despite noting a recent slowdown in Indian growth, particularly evident in the industrial sector which contributed to an unexpected 5.4 percent growth in the September quarter.
This projection stands in contrast to the World Bank's more optimistic outlook, which maintains its forecast at 6.7 percent for the same period.
The World Bank emphasises that India is set to retain its position as the fastest-growing major economy, citing anticipated expansion in the services sector and strengthening manufacturing activity, supported by government initiatives in logistics infrastructure and tax reforms.
Domestically, the National Statistics Office's First Advance Estimates indicate a deceleration in growth for FY25 to 6.4 percent, marking a four-year low and falling below the Reserve Bank of India's projection of 6.6 percent for the current financial year.
In its global outlook, the IMF predicts worldwide growth to maintain stability at 3.3 percent through 2025 and 2026, though this represents a marked decrease in potential growth since the pandemic.
The forecast reflects an upward revision for the United States, which offsets downward adjustments in other major economies. China's growth projection for 2025 has been marginally increased to 4.6 percent, factoring in the fiscal package announced in November.
The IMF highlights several risk factors, including the potential impact of protectionist policies, geopolitical tensions, and inflationary pressures. The organization warns that escalating conflicts in the Middle East and Ukraine could affect trade routes and commodity prices, particularly impacting commodity-importing nations.
However, it also notes potential upside scenarios, suggesting that new trade agreements and structural reforms could enhance medium-term growth prospects.
The report concludes with policy recommendations, emphasizing the need to address short-term risks while building economic buffers.
It particularly stresses the importance of maintaining restrictive monetary policies in economies facing persistent inflationary pressures until there is clear evidence of inflation returning to target levels.
(KNN Bureau)
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