IMF flags Super El Niño risks to India’s growth, says impact yet to materialise

The International Monetary Fund (IMF) has flagged the potential impact of the Super El Niño weather phenomenon on India’s economy, warning that lower crop yields and higher food prices could weaken household purchasing power. However, the risks have not yet materialised, the global lender said on Thursday.The IMF will reassess its growth projections for India in January, when it releases its next World Economic Outlook (WEO) update, depending on how the weather-related risks evolve, IMF Communications Director Julie Kozack said."So these are risks that we see that India faces, but right now those risks have not materialised," Kozack told a press conference.Earlier this month, the IMF raised its growth forecast for India to 7% for both FY27 and FY28.

In July, it had projected growth of 6.4% for FY27 and 6.7% for FY28.The revised forecasts reflect strong domestic demand and robust activity in the services sector, Kozack said. India continues to be a key driver of global economic growth, she added.Live Events"So, we see it really as a risk going forward, and of course depending on whether that risk materialises, we will reassess our growth projections for India the next time in our January WEO update," Kozack said."But for now what we see is quite strong growth momentum in India, and it continues to be an engine of growth," the IMF official said.The potential effects of Super El Niño include weaker agricultural output and higher food inflation, which could reduce the purchasing power of Indian households.

The IMF has identified these as risks to monitor but has not yet factored in a realised impact from the weather event, according to Kozack.The IMF released its latest World Economic Outlook report in Bangkok earlier this month, projecting 7% growth for India in both FY27 and FY28 on the back of domestic demand and strong services activity.(You can now subscribe to our Economic Times WhatsApp channel)