The International Monetary Fund (IMF) has maintained its GDP growth forecast for India at 7% for the fiscal year 2025 (FY25), consistent with its earlier projections made in July. This forecast reflects a moderation from the 8.2% growth recorded in 2023, as the economy transitions from the effects of pent-up demand accumulated during the pandemic.

"In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential," the IMF said in the World Economic Outlook.

The IMF anticipates a further decline to 6.5% for FY26, indicating a gradual slowdown in economic momentum as the economy reconnects with its potential.

The IMF projects consumer price inflation at 4.4% for FY25 and 4.1% for FY26, alongside a current account deficit of 1.1% this year, increasing to 1.3% next year.

The global economic growth is expected to decelerate to 3.2% in 2024, down from 3.3% previously projected, with emerging markets like India and China expected to see shifts in manufacturing production as advanced economies lose competitiveness.

The outlook from the Washington-based organization of 190 countries was a mixed bag for the global economy with optimism on inflation but warnings over debt levels and increasing geopolitical and trade volatility. In particular, the IMF said continued tensions in the Mideast threaten commodity prices and overall trade in the region.

"It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries," IMF said.

The Reserve Bank of India (RBI) has also kept its growth forecast unchanged at 7.2%, citing strong domestic consumption and investment trends.