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IMF projects India as the fastest-growing major economy in 2023

By Nithya Bose in Business News, posted July 26, 2023

The International Monetary Fund (IMF) has raised its growth forecast for India in 2023 by 20 basis points, now projecting a robust 6.1 percent growth rate.

This development strengthens India's position as the world's fastest-growing major economy, particularly as China's growth momentum slows.

The organization attributed the upward revision to India's strong growth in the fourth quarter of last year, driven by domestic investments.

The IMF's outlook for India in 2024 remains unchanged at 6.3 percent.

India's emergence as a bright spot for global growth is noteworthy as China seeks to reflate its faltering growth momentum while managing economic rebalancing.

The agency maintains its growth projections for China at 5.2 percent this year and 4.5 percent for the next, shifting towards consumption-led growth to offset the impact of the downturn in real estate investment.

The IMF expects India and China to be the driving forces for emerging and developing Asia, projecting growth rates of 5.3 percent for 2023 and 5 percent for 2024.

However, the regional forecast 2024 was downgraded slightly by 0.1 percentage point.

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In Japan, growth is projected to reach 1.4 percent in 2023, reflecting a modest upward revision of 0.1 percentage point due to pent-up demand and accommodative policies in Tokyo.

However, the IMF expects growth to slow to 1.0 percent in 2024 as the effects of past stimuli diminish.

Globally, the agency raised its growth forecast for 2023 to 3 percent, up from 2.8 percent in its previous assessment in April.

Concerns over tighter credit conditions, depleted household savings in the US, and a slower-than-expected economic recovery in China from strict Covid-19 lockdowns contributed to the increased growth prediction.

The IMF maintained its 2024 global growth forecast at 3 percent.

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