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Asia, led by India, is poised to make a significant contribution to global growth, with projections indicating that the region will account for about 60 per cent of global growth, as highlighted by the International Monetary Fund (IMF) at a press briefing on the Regional Economic Outlook for Asia and Pacific.
"We now project the region to grow by 4.5 per cent in 2024--an upward revision of 0.3 percentage points relative to October. With this, Asia would contribute about 60 percent of global growth. The region is projected to grow by 4.3 per cent in 2025," said Krishna Srinivasan, Asia and Pacific Department Director, IMF. He further added that "In China and India, we expect investment to contribute disproportionately to growth--much of it public, especially in India". The IMF also recommends the Asian central banks to focus on domestic inflation and avoid overreliance on anticipated moves by the Federal Reserve. According to IMF, the US interest rates have a strong and immediate impact on Asian financial conditions and exchange rates. In terms of fiscal policy, the IMF recommends Asian governments, including India, focus on consolidation to curb rising public debt levels and rebuild fiscal buffers, ensuring sustainable development and resilience. Highlighting the critical role of China's economy in the region, the IMF warns against a protracted slowdown in China, noting potential adverse effects on the region. While policy support in China could benefit Asia, measures that reinforce deflationary pressures may provoke frictions. The IMF acknowledges the unexpected surge in growth experienced by Asia in the second half of 2023, with Malaysia, the Philippines, Vietnam, and India recording substantial positive growth surprises. The region's growth reached 5.0% in 2023, surpassing the previous year's growth, and is projected to grow by 4.5% in 2024. According to the IMF, factors driving growth vary by country, with investment expected to play a significant role in China and India, while robust private consumption remains a key driver in Emerging Asia. The IMF warns of inflationary pressures across Asia and emphasizes the importance of differentiated policy approaches to address them. "In China and India, we expect investment to contribute disproportionately to growth--much of it public, especially in India. In Emerging Asia outside China and India, robust private consumption will remain the main growth engine" said Krishna Srinivasan, Asia and Pacific Department Director, IMF. The IMF's Regional Economic Outlook is scheduled to be launched on April 30 in Singapore, where further discussions on these economic trends and policies will take place. (ANI)
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