The International Monetary Fund on Monday raised its output growth estimate on emerging markets for this year, with projections now showing the economic slowdown in the region may have bottomed out in 2022, on the back of China reopening, a resilient India and unexpected growth in Russia.
Inflation in India is expected to come down from 6.8 percent in the current fiscal year ending March 31 to 5 percent the next fiscal, and then drop further to 4 percent in 2024.
Leading the growth charge in 2023, IMF said India continues to be seen growing over 6% this year and next, while the upward revision of China by 0.8 percentage point sets it on track for growth above 5% this year.
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“If we look at both China and India together, they account for about 50% of world growth in 2023, so a very significant contribution,” Reuters quoted Pierre-Olivier Gourinchas, chief economist and director of the research department at the IMF, as saying.
Russia, on the other hand, has seen a 2.6 percentage point increase in the 2023 growth projection, which translates to a view of a 0.3% expansion this year.
The Russia revisions are mostly due to ‘fairly high’ export revenue last year as well as the strong fiscal stimulus from Moscow, partly in military spending.
However, over the medium term, there is still a massive drop in output forecast for Russia and tied to its invasion of Ukraine, IMF said.
About 84 percent of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022.
Global inflation is set to fall from 8.8 percent in 2022 (annual average) to 6.6 percent in 2023 and 4.3 percent in 2024 — above pre-pandemic (2017–19) levels of about 3.5 percent.
IMF sees growth in emerging market and developing economies at 4.0% in 2023, 0.3 percentage point higher than its October projection, and 0.1 percentage point higher than the 3.9% estimate for 2022.
For 2024, the projection is for a 4.2% expansion.
Inflation, a recent hamper on growth, is seen high although continuing to slow this year and next. Emerging and developing economies are seen having posted price increases of 9.9% in 2022, then slowing to 8.1% in 2023 and 5.5% in 2024, still above the 4.9% average in 2017–2019.
(With inputs from agencies)
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