IMF raises Asia-Pacific growth outlook to 4.5% for CY24

Asia's growth outlook for 2024 brightens with the International Monetary Fund projecting 4.5% growth, driven by China and India.

Rhik Kundu
First Published30 Apr 2024
China said it will forgive a total of 23 interest-free loans to African nations and redirect $10 billion of IMF reserves -- a big relief for the continent.
China said it will forgive a total of 23 interest-free loans to African nations and redirect $10 billion of IMF reserves -- a big relief for the continent.(AFP)

The Asia-Pacific region will grow less slowly than previously feared, the International Monetary Fund (IMF) said on Tuesday, reflecting an improved outlook for two of the region’s largest economies, China and India.

"The outlook for Asia and the Pacific in (calendar year) 2024 has brightened: we now expect that the region’s economy will slow less than we previously projected as inflation pressures continue to dissipate," IMF said in a blog post titled 'Asia's Growth and Inflation Outlook Improves, but Risks Remain' which was released on Tuesday.

China is the largest economy in the region and India the third-largest, coming in after Japan.

Reflecting upgrades

"We have raised our regional growth forecast for this year to 4.5%, up 0.3 percentage point from six months earlier, after a 5% expansion in 2023. The revision reflects upgrades for China, where we expect policy stimulus to provide support, and India, where public investment remains an important driver, making it the world’s fastest-growing major economy," the IMF report said.

Also read: Long-term inflation outlook at odds with near-term risks: RBI bulletin

"In a still subdued external environment, robust private consumption will remain the main growth driver in Asia’s other emerging market economies. The Asia growth forecast for 2025 is unchanged at 4.3%," it added.

Anticipating increased economic activity in the ongoing fiscal (FY25), the IMF on 16 April raised India's FY25 GDP growth forecast to 6.8% from its earlier forecast of 6.5%.

In line

The IMF’s upward revision of the FY25 GDP growth forecast came after similar revisions were made by several others, including the World Bank, Asian Development Bank and S&P Global.

In its April edition of the World Economic Outlook, the IMF said it expects India's FY26 (next fiscal) GDP growth at 6.5%. The IMF expects India to grow at 7.8% in FY24.

Also read: Domestic engines to power India's growth: IMF

Last month, S&P Global raised India’s FY25 growth forecast to 6.8%, from 6.4% predicted in November, on the back of strong domestic demand and a pick-up in exports. The US rating agency expects GDP growth to moderate in FY25 after better-than-expected 7.6% growth in FY24.

The Asian Development Bank (ADB) recently raised India’s GDP forecast for FY25 to 7% from 6.7% projected earlier. Recently, the World Bank also revised its forecast for India’s GDP growth to 6.6% for FY25 from 6.4% predicted for the fiscal earlier.

Soft landing

“Global disinflation and the prospect of lower central bank interest rates have made a soft landing more likely, hence risks to the near-term outlook are now broadly balanced,” Krishna Srinivasan, director of IMF’s Asia and Pacific department, wrote in a blog post.

Also read: Finmin shrugs off IMF's debt concern

"China’s central government has ramped up spending this year to support an economy still reeling from a weakened property sector and to propel growth to its target near 5%. In India, the government ramped up capital spending by a third for 2024, the third year in a row," he said.

"China’s real gross domestic product is seen expanding 4.6% in 2024 from the prior year, and India to rise 6.8% this year, the IMF said. Officials left the 2025 regional outlook unchanged at a 4.3% advance. Several risks remain, the IMF said. Chief among them is a long-term property sector downturn in China, which would weaken demand and prolong deflation. Other challenges include growing fiscal deficits and risks to trade from US-China tensions," Srinivasan added.

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