This trend indicates that emerging economies like India are becoming key players in the global manufacturing landscape….reports Asian Lite News
The International Monetary Fund (IMF), in its latest World Economic Outlook report, has highlighted a significant global shift in manufacturing production towards emerging markets like India and China as advanced economies lose competitiveness.
This trend indicates that emerging economies like India are becoming key players in the global manufacturing landscape.
“Manufacturing production is also increasingly shifting toward emerging market economies–in particular, China and India–as advanced economies lose competitiveness” said IMF in its report.
The IMF report also noted that there is also a broader shift in consumer behaviour from goods to services. This shift is fueling growth in the services sector in both advanced and emerging markets.
However, it is simultaneously leading to a slowdown in manufacturing activity. The global economy is thus witnessing a rebalancing between these two sectors.
IMF added “This rebalancing is tending to boost activity in the services sector in advanced and emerging markets but is dampening manufacturing.”
For India, the IMF projects a GDP growth at 7 per cent in 2024. The IMF report stated that the GDP will moderate in the coming years. “In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted” the report added.
The report attributed this slowdown to the exhaustion of pent-up demand that accumulated during the pandemic, as the economy begins to stabilize and reconnect with its potential growth path.
On the global front, the IMF pointed out that there has been little change in the overall growth outlook since its April 2024 report. Following the strong post-pandemic rebound, global GDP growth has been hovering around 3 per cent in both the short and medium term.
It said “the global projection for GDP growth has been hovering at about 3 per cent, both in the short and the medium term”.
The IMF cautioned that this weak growth is likely to persist, extending beyond the current disinflation period, suggesting that the pandemic may have caused a long-term reduction in potential growth across the global economy.
The report also noted the challenges faced by advanced economies while highlighting the opportunities for emerging markets like India and China to strengthen their positions in global manufacturing. (ANI)
Economists Hail India’s Growth
Top economists on Wednesday hailed India’s GDP projections from global financial institutions like the International Monetary Fund (IMF) and Deloitte, saying the surge in rural consumption was primarily driving the country’s GDP growth story.
The International Monetary Fund (IMF) maintained its India growth rate projection at 7 per cent in the current fiscal year. According to Deloitte, India’s annual GDP growth was projected to be between 7 and 7.2 per cent in FY 2024-2025, which was in line with the Reserve Bank of India’s (RBI) prediction of the country witnessing real GDP growth at 7.2 per cent for FY25.
Sanju Verma, an economist and national spokesperson of the BJP, told IANS that the average monthly income of rural households in India has increased by almost 58 per cent over five years as per the latest survey by the National Bank for Agriculture and Rural Development (NABARD), and that was amply evident from what the festival season sales numbers look like in rural areas.
“The purchasing power was certainly intact and a large chunk of the festival season sales were being driven by rural and semi-urban India, once again endorsing the fact that the rural growth story in India was firing on all cylinders,” she emphasised.
It was not just the GDP growth trajectory, which under the leadership of Prime Minister Narendra Modi, was slated to be intact but the moot point here was that while GDP growth was moving upwards, inflation was slated to move southwards.
The RBI’s forecast for FY25 in terms of CPI inflation was retail inflation would stand at just 4.5 per cent, followed by an even lower 4.3 per cent in FY26.
According to the IMF, India’s headline inflation in FY25 will be just 4.4 per cent and even lower, at barely 4.1 per cent, in FY26.
“So every global financial institution that matters was saying that while inflation will moderate substantially for India, going forward, GDP growth trajectory will be northward-bound which was excellent news,” Verma told IANS.
The global GDP growth, as per the IMF, in CY 2024 was likely to be barely in the region of 3.2 per cent and for China, that number was 4.8 per cent, while the inflation in large parts of the western world was still pretty sticky.
“Amid this backdrop, what India has managed to achieve in terms of the rural consumption story firing on all cylinders under PM Modi’s visionary leadership was no mean achievement,” said Verma.
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