India’s growth projected to reach 6.2% in FY25: OECD

According to the inter-governmental group of 38 high-income economies, the Indian economy is projected to experience a growth rate of 6.7% this year. This aligns with the International Monetary Fund's estimation of 6.7% growth but falls short of the initial estimate of 7.3%.

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India’s economy is projected to grow at a faster rate of 6.2% in FY25, up from the earlier estimate of 6.1%, due to strong investment growth, according to the Organisation for Economic Co-operation and Development (OECD).

The OECD, which consists of 38 high-income economies, expects India’s economy to grow by 6.7% in the current year, in line with the International Monetary Fund’s projection. However, this is lower than the first advance estimate of 7.3% growth.

According to the OECD, the growth in emerging-market economies has remained solid, despite tighter financial conditions. This can be attributed to improved macroeconomic policy frameworks, substantial investment in infrastructure, including India, and consistent employment gains.

The OECD has maintained its growth forecast for India at 6.5% for 2025-26. The outlook highlights that recent moderate growth is likely to continue based on high-frequency activity indicators, with stronger activity developments in the services sector compared to manufacturing.

“Strong near-term momentum is evident in India, while Europe is experiencing relative weakness, and most other major economies are projected to have mild near-term growth,” the outlook states.

The OECD report also mentions that inflation in emerging-market economies is expected to gradually ease through FY25, while remaining generally higher than in advanced economies. Inflation in Brazil, India, Indonesia, Mexico, and South Africa is projected to continue easing and converge towards central bank targets by the end of 2025.

In its recent review of the economy, the economic division of the finance ministry stated that the Indian economy is likely to expand at around 7% in FY25, making it the fourth consecutive post-pandemic year with growth at or above 7%.

At the global level, the OECD forecasts a slight decline in gross domestic product (GDP) growth to 2.9% in 2024, from 3.1% in 2023, before recovering to 3% in 2025 as financial conditions ease.

Tarah Nguyen