IMF

IMF is raising its major growth rate forecasts for the year 2023 in India

The International Monetary Fund boosted its growth prediction for India in 2023 by 20 basis points to 6.1%, raising hopes that the current G20 chair will be the world's fastest-growing major economy this year.

The IMF said Tuesday in its July update to its World Economic Outlook that its adjustment was influenced by higher growth in the fourth quarter of last year, fueled by domestic investment. Its 2024 forecast for 6.3% growth in India remains unchanged from its April forecast.

The projections highlight India's rise as a bright area for global growth. This comes as China's shine is fading as Beijing strives to rekindle failing growth momentum while remaining committed to rebalancing the world's second-largest economy.

Nonetheless, the IMF predicts that China will grow by 5.2% this year and 4.5% next year. While the predictions remained unchanged from the April forecast, the IMF now expects China's growth to be led by consumption, which should offset the underperformance in investment caused by the real estate slowdown.

Late Monday, China's top leaders promised to "adjust and optimize policies promptly" for the country's troubled real estate sector while elevating steady employment to a strategic aim. They also promised to increase domestic consumption demand and eliminate local debt concerns.

The IMF expects India and China to drive growth in emerging and developing Asia, which it forecasts will rise 5.3% this year and 5% next year — a 0.1 percentage point lower than its 2024 regional prediction.

Japan's growth is expected to reach 1.4% in 2023, representing a 0.1 percentage point upward adjustment due to pent-up demand and Tokyo's accommodating policies. The IMF then forecasts Japanese economic growth to decline to 1.0% in 2024 as the impact of the previous stimulus wear off.

The IMF increased its global growth forecast 2023 by 0.2 percentage points to 3%, up from 2.8% in April. The graph emphasizes worries about tighter financial conditions, reduced household savings in the United States, and a slower-than-expected economic recovery in China due to rigorous Covid-19 lockdowns. The IMF maintained its 3% growth prediction for 2024.