Strong investment growth is likely to push India’s economy to grow faster at 6.2% in FY25 compared with 6.1% projected earlier, the Organisation for Economic Co-operation and Development said Monday.
The inter-governmental group of 38 high-income economies expects the Indian economy to grow 6.7% in the current year, in line with the International Monetary Fund’s estimate of 6.7% growth but lower than the first advance estimate of 7.3%.
“India and Indonesia are both expected to expand steadily over the next two years, helped by strong investment growth, with GDP rising by more than 6.25% and 5% per annum, respectively,” OECD noted in its interim economic outlook, projecting a higher 6.5% growth in FY26.
India will likely perform better on the inflation front, with inflation falling to 4.9% in FY25 compared with 5.3% projected in November.
For FY26, the OECD forecasts 4.3% inflation, slightly higher than the 4.2% inflation projected earlier.
“In Brazil, India, Indonesia, Mexico and South Africa, inflation is projected to continue easing and converge on or towards central bank targets by the end of 2025,” it said.
Experts indicate that the Reserve Bank of India will likely cut the policy rate to 6.25% in the June or August meeting.
Moderate growth phase for global economy
The OECD also raised the global growth outlook to 2.9% in 2024 from 2.7% projected earlier but said that growth is likely to stay subdued in the coming years. It forecasts 3% growth in 2025 compared with 3.1% estimated for 2023.
“Recent indicators point to some moderation of growth, with the effects of tighter financial conditions continuing to appear in credit and housing markets, and global trade remaining subdued,” OECD said.
It also noted simmering tensions in the Middle Eastern region as a threat to growth.
“High geopolitical tensions are a significant near-term risk to activity and inflation, particularly if the conflict in the Middle East were to disrupt energy markets,” it said, highlighting the problems in the Red Sea.
