IMF Deputy Managing Director Gita Gopinath Highlights Asia’s Leading Role in Global Economic Growth
News Mania desk/Agnibeena Ghosh/15th May 2024
Asia continues to be the driving force behind global economic growth, with the International Monetary Fund (IMF) projecting it to contribute 60 percent of global growth this year, according to IMF Deputy Managing Director Okamura. Despite various challenges, including the ongoing pandemic and geopolitical tensions, the global economy has displayed resilience, with the IMF forecasting global growth to reach 3.1 percent this year.
Speaking at the Thirteenth IMF-Japan High-Level Tax Conference for Asian Countries, Okamura emphasized Asia’s proactive approach in curbing inflation, with most countries in the region expected to meet central bank targets by 2024. However, he underscored the persistent challenges governments face due to the extensive support provided during the pandemic and ongoing geopolitical conflicts, which have strained resources and escalated debt servicing costs.
While demand for public spending is increasing, particularly in Asia, where aging populations and climate change pose significant challenges, Okamura highlighted the imperative of mobilizing domestic revenues to meet growing spending demands and enhance resilience against future shocks. He stressed that emerging markets and developing economies have the potential to boost their tax-to-GDP ratios significantly, by up to 9 percentage points on average, thus mitigating fiscal constraints.
Meanwhile, the IMF’s latest World Economic Outlook projects India to maintain its status as the fastest-growing major economy in 2024, with a growth rate of 6.8 percent, up from the previous projection of 6.5 percent. The IMF attributes India’s robust growth prospects to strong domestic demand and a burgeoning working-age population. Furthermore, countries with a demographic dividend, such as India and sub-Saharan Africa, are poised to contribute significantly to the global workforce, with nearly two-thirds of new entrants expected to originate from these regions over the medium term.
India’s official data corroborates the IMF’s optimistic outlook, indicating a substantial growth rate of 8.4 percent during the October-December quarter of the financial year 2023-24. This momentum builds on the country’s consistent economic expansion, with growth rates of 7.8 percent and 7.6 percent recorded in the preceding quarters. India’s economy has demonstrated resilience and agility, achieving growth rates of 7.2 percent and 8.7 percent in the financial years 2022-23 and 2021-22, respectively.
In contrast, China’s growth is projected to moderate, with the IMF forecasting a growth rate of 4.6 percent for the current year and 4.1 percent in 2025. Despite this, the global economic outlook remains optimistic, with the IMF estimating global growth rates of 3.2 percent for both 2024 and 2025. The IMF highlights the remarkable resilience of the global economy, noting its ability to withstand various challenges, including inflationary pressures returning to target levels.
Overall, the IMF’s assessments underscore the pivotal role of Asia in driving global economic growth, with countries like India poised to lead the way with robust domestic demand and favorable demographic trends. Despite prevailing challenges, the global economy remains resilient, with concerted efforts needed to mobilize domestic revenues and ensure sustained growth and stability.
