The International Monetary Fund (IMF) has raised India’s growth forecast for FY24, citing strong domestic investment and the world's battle against inflation is far from over. However, it cautioned that the global economy is ‘not out of the woods’ yet.

The global lender has forecasted India growth at 6.1% in FY24, up from 5.9% estimated in April. However, the FY25 forecast remains the same at 6.3%.

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“Growth in India is projected at 6.1% in 2023, a 0.2 percentage point upward revision compared with the April projection, reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment,” the IMF stated in its July update of the World Economic Outlook (WEO).

As per The Economic Times report, India’s economy grew better-than-expected 6.1% in the March quarter, lifting FY23 expansion to a strong 7.2%.

On the other hand, the Reserve Bank of India (RBI) has estimated India’s growth for FY24 at 6.5%. The Asian Development Bank (ADB), in its update released last week, also retained India’s growth forecast at 6.4%, citing a recovery in consumption demand in rural and urban areas.

The IMF further said that the global economy continues to gradually recover from the Russia-Ukraine war crisis. “The global recovery from the Covid-19 pandemic and Russia’s invasion of Ukraine is slowing amid widening divergences among economic sectors and regions,” the IMF said.

It further said, “The resolution of US debt ceiling tensions has reduced the risk of disruptive rises in interest rates for sovereign debt, which would have increased pressure on countries already struggling with increased borrowing costs.”

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The global economy is seen growing 3% in 2023, 0.2 percentage point upgrade to April projections, under the baseline projections. The world economy expanded by 3.5% in 2022.

“The balance of risks to global growth remains tilted downward, but adverse risks have receded since the publication of the April 2023 WEO,” it added.

The IMF further raised concerns about the price trajectory across economies, flagging slow moderation in core inflation. “Inflation is easing in most countries but remains high, with divergences across economies and inflation measures,” it said.