India Maintains Position As Fastest-Growing Economy; IMF Reports Strong Outlook

According to the latest Regional Economic Outlook for the Asia-Pacific region released by the International Monetary Fund (IMF), India continues to hold its title as the world’s fastest-growing economy, propelled by robust investment and private consumption.

In its recent World Economic Outlook published on 2 October, the IMF reaffirmed its growth projections for India’s gross domestic product (GDP), predicting an impressive 7 percent growth for the fiscal year 2025 and 6.5 percent for the fiscal year 2026.

This steadfast outlook comes despite anticipated slowdowns across the broader Asia-Pacific region in 2024 and 2025, largely attributed to diminishing post-pandemic recovery support and demographic challenges such as an aging population.

The IMF report highlights that, while growth is likely to moderate in Asia, the short-term prospects for the region are better than previously anticipated.

The IMF slightly raised the growth forecast for the Asia-Pacific region by 0.1 percentage points to 4.6 percent for 2024, reflecting strong early-year performance.

Analysts project that the Asia and Pacific region will account for approximately 60 percent of global growth this year.

However, the IMF cautions that significant economic and geopolitical uncertainties temper this positive outlook.

Accompanying the regional outlook report, an IMF blog emphasized a pivotal shift in the region’s growth dynamics.

Traditionally driven by manufacturing, the focus is gradually shifting toward modern tradable services as a burgeoning source of growth and productivity.

The services sector has already absorbed around half of the region’s workforce, a significant increase from just 22 percent in 1990, as millions transition away from agriculture and factory jobs.

This transformation is expected to accelerate with the expansion of international trade in modern services such as finance, information technology, and business outsourcing – sectors in which India and the Philippines have already established strong footholds.

IMF Raises 2025 Growth Forecast To 4.4% Amid Improved Conditions

Looking ahead to 2025, the IMF anticipates that more favorable monetary conditions will bolster economic activity, leading to a slight upward revision in growth forecasts to 4.4 percent, up from 4.3 percent projected in April.

While inflation has eased across much of the region, the report cautions that rising geopolitical tensions, uncertainties surrounding global demand, and potential financial volatility pose increased risks.

Moreover, demographic changes could impede growth, but structural shifts toward high-productivity sectors, particularly tradable services, offer hope for sustained economic momentum.

While the Asia-Pacific region faces its share of challenges, India’s resilient economic performance and strategic shifts in its labor market signal a promising path forward amid global uncertainties.

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