OECD Raises India’s Growth Forecast for FY25 to 6.2%

In its latest interim economic outlook, the Organization for Economic Co-operation and Development (OECD) has revised India’s GDP growth forecast for the fiscal year 2024-25 (FY25) upwards to 6.2%, a marginal increase from the previous estimate of 6.1%.

Growth Forecast for FY26: Unchanged at 6.5%

• For the fiscal year 2025-26 (FY26), the OECD maintains its growth forecast for India at 6.5%.
• The outlook highlights that despite tighter financial conditions, emerging-market economies, including India, continue to grow steadily. This growth is attributed to improved macroeconomic policies, robust infrastructure investments, and consistent employment gains.

Near-term Momentum and Inflation Trends

• High-frequency activity indicators suggest sustained moderate growth, with services showing stronger activity trends compared to manufacturing.
• Globally, India exhibits strong near-term momentum, contrasting with relative weakness in Europe and mild growth in other major economies.
• Inflation projections indicate a gradual easing in emerging-market economies, influenced by tighter monetary policies and fluctuations in energy and food prices.
• In countries like Brazil, India, Indonesia, Mexico, and South Africa, inflation is expected to converge towards central bank targets by the end of 2025.

Outlook on Indian Economy

• The Indian economy is expected to expand around 7% in FY25, marking the fourth consecutive year of growth post-pandemic.
• There is optimism that India may achieve another year of 7% real growth in FY25, reflecting the resilience and potential of the economy.

Global GDP Projection

• At a global level, the OECD forecasts a slight easing in gross domestic product growth to 2.9% in 2024, recovering to 3% in 2025 as financial conditions ease.