Workers work at the construction site of the coastal road project in Mumbai, January 12, 2022.
Punit Paranjpe | AFP | Getty Images
The International Monetary Fund on Tuesday raised its 2024 growth forecast for Asia as it remained optimistic about India’s growth and highlighted the need for more stimulus from China.
The IMF currently expects Asian economies to grow at 4.5% this year, 0.3 percentage points higher than six months ago. The forecast for 2025 remains unchanged at 4.3%.
“The outlook for the Asia-Pacific region in 2024 has brightened, with the region’s economic slowdown expected to be slower than previously expected as inflationary pressures continue to ease,” said Krishna Srinivasan, IMF Asia and Pacific Director. said.
The IMF said the upward revision reflects China’s upgrade and expects policy stimulus will lead to support.
He said India is “the world’s fastest growing major economy” and “public investment remains a key driver”. India is currently the world’s fifth largest economy with a GDP of $3.7 trillion, and aims to become the world’s third largest economy by 2027.
The IMF’s Srinivasan also said that strong consumer spending will continue to drive growth in other emerging markets in Asia.
The IMF assessed that monetary tightening, falling commodity prices, and calming supply chain disruptions are driving inflation down in Asia, despite strong demand growth.
The IMF said the biggest risk to Asian economies is a prolonged adjustment in China’s real estate sector. If that happens, demand will decline, increasing the possibility of prolonged deflation, and increasing the possibility of damaging other countries’ economies through “direct trade spillovers.”
“This means that China’s policy response is important, both for itself and for the region as a whole,” Srinivasan said in a blog post.
The IMF said China needed a policy package that would “accelerate the exit of unviable real estate developers, expedite the completion of housing projects, and manage local government debt risks.” The report noted that China’s fiscal stimulus measures in October and March helped cushion the impact of lower manufacturing activity and weaker services.
Earlier this year, the IMF announced that Asia’s largest economy is expected to grow by 4.6% in 2024. The forecast came ahead of data showing China’s economy grew 5.2% last year, in line with the official target of about 5%.
