IMF’s World Economic Outlook Report 2024 Highlights on Global Economy

Context: The International Monetary Fund (IMF) recently revised India’s growth projection upwards to 6.8% for 2024, citing robust domestic demand conditions and a growing working-age population.

India’s Growth Projection as per IMF’s World Economic Outlook

• IMF’s Revised Forecast: The IMF raised India’s growth projection to 6.8% for 2024, up from its previous estimate of 6.5% in January.
• Continued Growth Momentum: India’s growth trajectory remains strong, driven by robust domestic demand and a rising working-age population.
• Comparison with China: India outpaces China, with the latter’s growth projected at 4.6% for the same period.
• Inflation was projected to be 4.6% this year and 4.2% next year.

Global Economic Trends

• Emerging and Developing Asia: Growth in this region is expected to decline slightly from 5.6% in 2023 to 5.2% in 2024 and 4.9% in 2025, with a modest upward revision compared to previous estimates.
• China’s Slowdown: China’s growth is projected to slow from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025, attributed to factors such as easing post-pandemic consumption and weaknesses in the property sector.

About International Monetary Funds (IMF)

• Establishment: The IMF was created in 1944 following the Bretton Woods Agreement.
• Primary goal: To bring about international economic coordination to prevent competing currency devaluation by countries trying to promote their own exports.
  • Eventually, it evolved to be a lender of last resort to governments of countries that had to deal with severe currency crises.
• Membership: It has 190 member countries.
• Headquarter: Washington, D.C., USA.
• Functions:
  • International Cooperation: The IMF promotes global monetary stability and collaboration to prevent financial crises.
  • Financial Aid: It offers loans and financial support to members facing economic challenges, often with conditions to improve economic health.
  • Economic Surveillance: The IMF monitors economic developments and advises on policies for stability and growth.
  • Technical Assistance: It provides expertise and training in fiscal and monetary policy, as well as financial regulation.
  • Research and Analysis: The IMF researches various economic issues, including global economic trends and poverty reduction.
• Reports by IMF:
  • Global Financial Stability Report.
  • World Economic Outlook.
    • It is usually published twice a year in April and October.

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IMF World Economic Outlook Report

• Published biannually by the IMF.
• Publication Schedule: April and October for comprehensive reports, followed by less detailed updates in July and January.
• Data Provided: Includes information on member countries’ output, inflation, employment, fiscal balances, and debt statistics.
• It summarises the state of the world economy and significant recent developments.

Key Highlights of Recent World Economic Outlook Report

• Reserve Bank of India’s Estimate: The IMF’s estimate is lower than the Reserve Bank of India’s prediction of a 7% growth rate for FY24.
• FY25 Projection: The IMF also raised the growth projection for FY25 to 6.5% from the earlier 6.1%.
• IMF’s Medium-Term GDP Growth: The IMF has revised India’s medium-term (potential) GDP growth to 6.5% due to strong public investment, favourable labour market outcomes as seen in the latest PLFS report, and adjustments to the model.
• India’s economy is expected to reach the $5-trillion mark by 2027-28, and subsequently become the third-largest economy in the world.
• IMF Global Forecast: The IMF expects the global economy to grow by 3.1% in 2023, now projecting higher growth than its previous forecast, despite facing inflationary pressures, policy tightening, and turbulent markets.
  • The IMF predicts the US economy to grow at 2.1% in 2024, which is higher than the earlier forecast.

IMF’s Outlook for Global Economy

• Steady Growth: Global growth, estimated at 3.2% in 2023, is projected to continue at the same pace in 2024 and 2025.
• Resilience Amid Challenges: Despite challenges such as supply chain disruptions and the Russia-Ukraine conflict, the global economy has shown resilience, with steady growth and declining inflation.
• Prioritizing Economic Resilience: Policymakers are urged to focus on strengthening government finances and revitalizing economic growth prospects to enhance economic resilience.

Chief Economist’s Insights

• Economic Resilience: Pierre-Olivier Gourinchas, the IMF’s chief economist, emphasizes the global economy’s resilience, with growth bottoming out in 2022 and inflation slowing.
• Reduced Economic Scarring: While the US economy has surpassed its pre-pandemic trend, low-income developing countries may experience more economic scarring.
• Challenges in China: China’s economy grapples with challenges in its property sector, necessitating measures to boost domestic demand and address trade imbalances.

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