International Monetary Fund (IMF) Deputy Managing Director Gita Gopinath on Tuesday noted that growth in India & China will account for almost half of global growth in 2024. Quoting the World Economic Outlook update, Gopinath said the growth in major advanced economies is more aligned. The Euro area growth picks up as the US shows signs of cooling after a strong year.
"Growth in India & China will account for almost half of global growth in 2024. Growth in major advanced economies is more aligned: euro area growth picks up as the US shows signs of cooling after a strong year," Gopinath said.
The report highlighted that the global growth is projected will be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2% in 2024 and 3.3% in 2025.
Services inflation is holding up progress on disinflation, which is complicating monetary policy normalization. Upside risks to inflation have thus increased, raising the prospect of higher for even longer interest rates, in the context of escalating trade tensions and increased policy uncertainty. The policy mix should thus be sequenced carefully to achieve price stability and replenish diminished buffers.
In the same report, the IMF raised India’s growth projection for FY25 by 20 basis points to 7 per cent, citing “improved prospects” for private consumption, particularly in rural areas. The IMF said it expects gross domestic product (GDP) growth in FY26 to slow down to 6.5 per cent, same as projected in its April World Economic Outlook (WEO).
“The forecast for growth in India has also been revised upward, to 7.0 percent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” it said in an update to the WEO.
The Reserve Bank of India has also revised India’s growth forecast upward to 7.2 from 7 per cent earlier in June.