India’s strong economic performance ‘bright’ spot: IMF MD

At a time of heightened uncertainties for the global economy, India’s strong performance remains a bright spot, Kristalina Georgieva, managing director, IMF (International Monetary Fund) said today.

As per the IMF analysis, emerging markets and developing economies, including India and China, are expected to account for about 80% of global growth this year and next, with India alone expected to contribute over 15%. 

Notably, the Second Finance and Central Bank Deputies Meeting under India's G20 Presidency started today in Bengaluru, with finance ministers and central bank chiefs from G20 nations participating in the global talks.

Georgieva says beyond its role as a global growth engine, India is uniquely positioned to bring countries together. "In a world facing multiple challenges and rising geopolitical tensions, this leadership is critical — and beautifully captured in the theme of India’s G20 presidency: One Earth, One Family, One Future," she writes.

The IMF MD appreciated UPI, saying it has helped boost financial inclusion in the country. "India’s Unified Payments Interface is an excellent example of technology boosting financial inclusion." 

Last month alone, this layer of India’s digital public infrastructure processed over 8 billion transactions, she added. "And that system allows 400 million people in rural areas to participate with legacy ‘push button’ cellphones," she added.

India has conducted an in-depth assessment of CBDCs, said Georgieva, adding that it could inform similar studies elsewhere, accelerating digital progress worldwide. 

According to the IMF, this will be another challenging year, but it could represent a turning point—with inflation declining and growth bottoming out. "Indeed, while our latest projections show global growth slowing to 2.9 percent this year, we anticipate a modest rebound to 3.1 percent in 2024."

The IMF MD says bringing inflation back to target remains imperative, and to achieve that, policymakers need to stay the course on monetary tightening. "Aligning fiscal and monetary policies will help. Clear communication of these policy goals is vital to avoid a sudden repricing in financial markets."

IMF in its report on Monday had said China and India alone are expected to contribute more than half of global growth this year, with the rest of Asia contributing an additional quarter. 

Economists are equally bullish on China since a sudden re-opening has paved the way for a faster-than-expected rebound in activity. "China has strong trade and tourism linkages, so this is positive news for Asia, as half of the region’s trade takes place between its economies," IMF says. 

The international financial agency says its analysis in the latest Regional Economic Outlook for Asia and the Pacific shows that for every percentage point of higher growth in China, output in the rest of Asia rises by around 0.3%.

The IMF in its report earlier said the Indian economic growth will slow down to 6.1% during the calendar year 2023 as compared to 6.8% in 2022 before picking up to 6.8% in 2024. 

The slowing economic growth in 2023 is attributed to a weaker-than-expected recovery, subdued external demand, and tightening monetary and financial conditions. The IMF, however, changed India's growth forecast for 2024 upward to 6.8% from 6.1% in its October outlook.