APAC growth, inflation outlook improves, risks to prevail: IMF blog

IMF has raised its regional growth forecast for this year to 4.5 per cent, up by 0.3 percentage point from six months earlier, after a 5-per cent expansion in 2023.

The revision reflects upgrades for China, where IMF expects policy stimulus to provide support, and India, where public investment remains an important driver, making it the world’s fastest-growing major economy.

In a still subdued external environment, robust private consumption will remain the main growth driver in Asia’s other emerging market economies, IMF noted in a blog. The Asia growth forecast for 2025 is unchanged at 4.3 per cent.

Global disinflation and the prospect of lower central bank interest rates have made a soft landing more likely, and therefore, risks to the near-term outlook are now broadly balanced.

Asian governments need to pursue policies to reduce debt and deficits with greater urgency. Progress last year fell behind what IMF staff had originally projected.

IMF forecasts show that on current fiscal plans, debt ratios would stabilise for most economies, provided governments underpin these plans with concrete policies and follow through on them. But even then, debt would remain significantly higher than it was before the pandemic, the blog remarked.

To reduce debt levels and curtail debt service costs, governments need to streamline expenditures and, especially, raise more revenue, it suggested.

Fibre2Fashion News Desk (DS)