India, China to contribute half of world’s growth in 2023, 2024: IMF

The International Monetary Fund (IMF), in its most recent Regional Economic Outlook for Asia and the Pacific, has forecasted that India and China are poised to jointly contribute roughly half of the world’s economic growth in both 2023 and 2024.

India’s economy is anticipated to expand by 6.3% in the fiscal years 2024 and 2025, making it the fastest-growing major economy globally. In contrast, China’s economy is expected to grow at a rate of 5% in 2023 and 4.2% in 2024. The IMF attributed India’s robust growth to “strong” private demand, with the country’s economy expanding by 7.8% in the first quarter of fiscal year 2024. Private financial consumption expenditure in the same quarter grew by 6% year-on-year, a notable increase compared to the 2.8% growth in the previous quarter.

The IMF revised India’s FY24 growth projection upwards by 20 basis points, citing resilient domestic demand and robust investment inflows.

On a global scale, the IMF forecasts that the world’s economy will grow by 3% in 2023 and 2.9% in 2024.

The IMF expects the Asia and Pacific region to remain the most dynamic, with growth increasing from 3.9% in 2022 to 4.6% in 2023. However, in 2024, the IMF anticipates a slowdown in Asia’s growth to 4.2% and further moderation to 3.9% in the medium term, which would be the lowest in the past two decades, except for 2020.

The IMF also highlighted the risks of geo-economic fragmentation and de-risking policies of major economies affecting growth in the medium term. On the other hand, comprehensive reforms in China could boost growth prospects, especially for smaller and more open economies in the region.

Source: Financial Express