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Is India still a bright spot? IMF upgrades growth, but economists say it will be a bumpy ride

The International Monetary Fund raised its forecast for India, saying that the country’s growth will remain strong in 2023 and 2024.
According to the IMF’s October update of its World Economic Outlook., India’s economy will grow 6.3% in 2023, an increase from an earlier forecast of 6.1%.
Economists attribute India’s growth to increased consumption, infrastructure spending, and more businesses being set up in the country, but warn that headwinds remain and could be further escalated due to resurging inflation and geopolitical tensions.

The International Monetary Fund has raised its growth forecast for India, saying the country’s growth will remain strong in 2023 and 2024 — but analysts warn there will be headwinds ahead.

According to the IMF’s October update of its World Economic Outlook., India’s economy will grow 6.3% in 2023, an increase from an earlier forecast of 6.1%.

Economists who spoke to CNBC are also bullish about India’s growth, attributing the economy’s growth to an increase in consumption, infrastructure spending, and more businesses being set up — but they say geopolitical risks and inflation concerns will be challenging.

“India will continue to be a bright spot in the global economic picture,” Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis said.

The country “has been favored by foreign investors in recent years, reflecting its promising long-term outlook helped by a youthful demographics and a fast-expanding middle class. We expect such a trend to continue,” she told CNBC.

Consumer spending remains one of the biggest growth drivers in the world’s most populous nation, she added.