The International Monetary Fund (IMF) is expecting India’s economic growth to slow down to 6.1% in the next fiscal year, from its expected 6.8% during the current financial year ending March 31 – a projection that has not changed from the IMF’s October Outlook.

What Happened?: The IMF expects India to be the fastest growing major economy despite growth dropping off to 6.1% in FY24, in its latest ‘World Economic Outlook’ update. The financial agency adds that it expects "resilient domestic demand” despite “a challenging external environment.”

"Growth in India is set to decline from 6.8% in 2022-23 to 6.1% in 2023-24, before picking up to 6.8% in 2024,” according to the IMF World Economic Outlook update, titled ‘Inflation Peaking amid Low growth’.

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Per IMF’s updated projections, growth in emerging and developing Asia is expected to rise in 2023 and 2024 to 5.3% and 5.2% respectively, after the deeper-than-expected slowdown in 2022 to 4.3%.

“India remains a bright spot. Together with China, it will account for half of the global growth this year, versus just a tenth for the US and euro area combined,” highlights the IMF’s Economic Counsellor and the Director of Research, Pierre-Olivier Gourinchas.

Meanwhile, the United Nations agency projected global growth to decline from an estimated 3.4% in 2022 to 2.9% in 2023 and then rise to 3.1% in 2024. The forecast for 2023 is 0.2 percentage points higher than what was predicted by the IMF in its October 2022 World Economic Outlook but below the historical average of 3.8%.

The IMF report comes a day ahead of the Union budget FY24 on Wednesday, which is expected to help protect India's economy from global macroeconomic headwinds and geopolitical uncertainty.

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