IMF projects India as fastest growing economy in 2024

Business Wednesday 31/January/2024 08:05 AM
IMF projects India as fastest growing economy in 2024

Washington DC: The International Monetary Fund (IMF) in its growth forecast for 2024, has predicted that India will emerge as the fastest-growing economy yet again with a robust growth of 6.5 per cent.

On the other hand, other major economies will be showing modest growth. As per the report, the US will grow at 2.1 per cent, Germany will grow at 0.5 per cent, France at 1 per cent, Japan at 0.9 per cent and China at 4.6 per cent.

The IMF said that with disinflation and steady growth, the risks to global growth are broadly balanced and there is a possibility of a 'soft landing'.

"Global growth is projected at 3.1 per cent in 2024 and 3.2 per cent in 2025, with the 2024 forecast 0.2 percentage point higher than that in the October 2023 World Economic Outlook (WEO) on account of greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China," the IMF statement read.

It said that faster disinflation could lead to further easing of financial conditions and stronger structural reform momentum could bolster productivity with positive cross-border spillovers.

However, it also highlighted that a spike in new commodity price spikes from geopolitical shocks -- including continued attacks in the Red Sea -- and deepening property sector woes in China could also cause growth disappointments.

According to the global monetary organisation, the near-term challenge for policymakers is to successfully manage the final descent of inflation to target and calibrate monetary policy in response to underlying inflation dynamics.

It also said that there is a need for a renewed focus on fiscal consolidation to rebuild budgetary capacity to deal with future shocks, raise revenue for new spending priorities, and curb the rise of public debt
IMF also said that more efficient multilateral coordination is needed for debt resolution, for avoiding debt distress and creating space for necessary investments, as well as to mitigate the effects of climate change.

Meanwhile, the Indian economy is projected to grow close to 7 per cent in the financial year 2024-25 which starts this April, said the Ministry of Finance in its monthly review report.

The strength of domestic demand has driven the economy to a 7 per cent plus growth rate in the last three years.

India's economy grew 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22. The Indian economy is expected to grow 7.3 per cent in the current financial year 2023-24, remaining the fastest-growing major economy.

The robustness seen in domestic demand -- private consumption and investment -- traces its origin to the reforms and measures implemented by the government over the last 10 years, said the report issued by the Department of Economic Affairs.

"The supply side has also been strengthened with investment in infrastructure - physical and digital - and measures that aim to boost manufacturing. These have combined to provide an impetus to economic activity in the country," the review report noted.