India, China likely to contribute half of global growth

The International Monetary Fund (IMF) stated in its most recent Regional Economic Outlook (Asia and Pacific) report that India and China are expected to jointly contribute about half of the global growth in both 2023 and 2024.

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China’s economy is predicted to grow at 5% in 2023 and 4.2% in 2024, while India’s economy will expand at a rate of 6.3% in FY24 and FY25, the fastest among the world’s major economies.

According to the IMF, “strong” private demand yielded positive growth surprises in the country. India’s economy grew by 7.8% in the first quarter of FY24. During the quarter, private financial consumption expenditure increased at a rate of 6% year over year compared to 2.8% in Q4FY23.

The IMF raised India’s FY24 growth forecast by 20 basis points due to resilient domestic demand and strong investment inflows, according to the agency.

The IMF predicted that CPI inflation would be 5.5% on average in FY24 and 4.6% in FY25. The forecasts are 10 basis points higher than the Reserve Bank of India’s predictions for both years.

According to the multilateral organisation, the global economy will expand by 3.0% in 2023 and 2.9% in 2024.

“Asia and Pacific will remain the most dynamic region this year, with growth expected to rise from 3.9% in 2022 to 4.6% in 2023,” stated the IMF.

However, the agency expects Asia’s growth to slow to 4.2% in 2024 and 3.9% in the medium term, the lowest in the last two decades except for 2020.