IMF applauds India’s GDP data revamp

On Thursday, the International Monetary Fund (IMF) praised India's strong GDP fundamentals and its resilient response to the recent energy shock, according to a press briefing in Bangkok. IMF Director for the Asia and Pacific Department, Krishna Srinivasan, stated that India entered the energy crisis with robust domestic growth and prudent fiscal management.

The IMF revised its growth forecast for India, now expecting 7% growth for this year and next, and 6.9% over the medium term. This upward revision is due to the stronger-than-expected performance in the April-June quarter, with India's Ministry of Statistics and Programme Implementation (MoSPI) reporting a real GDP growth of 7.8% for that period.

The IMF sees India as one of the fastest-growing major economies, driven by resilient domestic demand and robust services activity. Its upward revisions are attributed to favorable demographics, a large and expanding domestic market, and ongoing structural reforms. Unlike other major economies, India does not require additional fiscal consolidation to maintain its debt-to-GDP ratio at 2025 levels, according to the IMF's report.

Srinivasan emphasized that the pressure on India's exchange rate does not indicate economic failure, as it is influenced by global interest rates, investor risk appetite, and oil prices. India, being an oil importer, has been affected by the energy shock. The World Economic Outlook report highlights that advanced economies have raised benchmark interest rates to multi-decade highs, raising borrowing costs for emerging markets, and that exchange rates have been volatile, particularly in Asia.

The IMF assumes oil prices around $96 per barrel in 2026 and expects the Strait of Hormuz to reopen from March 2027.

The IMF also addressed the revisions to India's GDP numbers, acknowledging the improvements in methodology and methodology consistent with IMF recommendations, including from its statistics department. The new GDP series, released by MoSPI with 2022-23 as the base year, follows the guidelines in the IMF's Quarterly National Accounts Manual of 2017.