Indian Economy : India remains the world's fastest-growing economy with investment and private consumption driving growth, according to the International Monetary Fund's ( IMF ) latest Regional Economic Outlook for the Asia-Pacific region. The IMF, in its World Economic Outlook report released on October 2, retained India's gross domestic product (GDP) growth forecast for FY25 and FY26 at 7 percent and 6.5 percent, respectively. The Regional Economic Outlook report said growth in Asia is expected to slow in 2024 and 2025, reflecting factors such as a lack of support for the recovery from the pandemic and an aging population. Moreover, short-term prospects were better than expected in April.

Asia-Pacific Region and the Global Economy

The IMF said the growth forecast for the Asia Pacific region in 2024 has been raised by 0.1 percentage points to 4.6 percent, mainly reflecting strong performance early in the year. With this, Asia and the Pacific region are expected to contribute about 60 percent of global growth this year. However, the report said that "the outlook also depends largely on economic and geopolitical uncertainties." A blog post released by the IMF along with the regional outlook report said that the manufacturing sector is driving growth in Asia but modern tradable services could be a new source of growth and productivity.

support for activities

It said the growth of services has already drawn nearly half of the region's workers into the sector, compared with just 22 percent in 1990, as hundreds of millions of people moved from farms and factories. "This shift is likely to be accelerated by the expansion of international trade in modern services such as finance, information, communication technology, and business outsourcing, as has already happened in India and the Philippines," the blog post said. More favorable monetary conditions are expected to support activity in 2025, resulting in modest growth of 4.4 percent from 4.3 percent in April.

Due to this, the brakes can be applied.

Inflation has eased across most of the region. At the same time, risks have also risen, reflecting rising geopolitical tensions, uncertainty about the strength of global demand, and the potential for financial instability. The report said demographic change will increasingly put the brakes on activity, although structural change in high-productivity sectors such as tradable services will sustain strong growth.