Regional Economic Outlook for Asia and Pacific for CY24: IMF

Context:

Recently, the IMF raised its Asia & Pacific growth forecast for 2024, highlighting India’s growth and China’s stimulus as key drivers.

Key Highlights of Forecast: 

• The IMF raised Asia’s economy to grow 4.5% this year, up 0.3 percentage points from six months earlier. 
  • Its forecast for 2025 remained unchanged at 4.3%.
• Inflation heterogeneity: 
  • Core inflation is largely expected to remain contained
  • Headline inflation may see further reductions due to lower energy prices in several economies in the Asia and Pacific region,
    • Food price pressures especially for rice may slow headline disinflation in India.
• On India : The IMF calls India “the world’s fastest-growing major economy,” where “public investment remains an important driver.” 
  • India is currently the world’s fifth-largest economy with GDP of $3.7 trillion and is aiming to become the world’s third-largest by 2027.
  • The IMF had earlier this month raised India’s growth forecast for the financial year 2024-25 to 6.8 percent from 6.5 per cent earlier.
    • Retained the growth forecast for 2025-26 at 6.5 per cent.
  • India and the Philippines have been the source of repeated positive growth surprises, supported by resilient domestic demand
• Global disinflation and the prospect of lower central bank interest rates have made a soft landing, Therefore risks to the near-term outlook are now broadly balanced.
• On China : Biggest risk for Asia’s economy is an extended correction in China’s property sector.
  • Growth rate for China, the world’s second-largest economy, is projected to slow from 5.2 per cent in 2023 to 4.6 per cent this year and 4.1 per cent in 2025.

Additional Reading: IMF