On 22nd October 2024, the International Monetary Fund (IMF) released its latest report titled ‘October 2024 World Economic Outlook (WEO): Policy Pivot, Rising Threats’, It has retained India’s Gross Domestic Product (GDP) growth forecast at 7% and 6.5% for Financial Year 2024-25 (FY25) and FY26, respectively.
- These growth projections by the IMF are in line with its previous estimates made in July 2024 WEO report.
- As per the report, the growth outlook for India will moderate from 8.2% in FY24 to 7% in FY25, this is due to pent-up demand accumulated during the COVID-19 pandemic has been exhausted, as the economy reconnects with its potential.
Global Scenario:
i.The report estimated that the global growth will remain stable at 3.2% in 2024 and 2025. However, it has marginally decreased the global growth rate for 2025 by 10 basis points (bps) to 3.2% from 3.3% projected in July.
ii.The report has raised its growth projection for Advanced economies for 2024 by 10 bps, from its previous estimate of 1.7% (in July 2024 WEO) to 1.8%. While, growth rate for Advanced economies will remain the same at 1.8% in 2025.
iii.The report has decreased the growth forecast for Emerging Markets and Developing Economies (EMDEs) by 10 bps from 4.3% to 4.2% for both 2024 and 2025.
- The report observed that the growth outlook for emerging markets and developing Asia is significantly stable for the next two years, hovering at about 4.2% and steadying at 3.9% by 2029.
Global Inflation:
i.The report highlighted that the global inflation will continue to decline. It has projected that global headline inflation will decline from an annual average of 6.7% (in 2023) to 5.8% (in 2024) and will further decrease to 4.3% (in 2025).
- The report underscored that despite stable goods prices, high services price inflation still persists in various regions of the world, emphasizing the need for monetary policy adjustment.
ii.The report projected India’s headline inflation rate at 4.4% for FY25 and 4.1% for FY26.
iii.The report has cautioned about the escalation in regional conflicts, especially in the Middle East region, could pose serious risks for commodity markets. Also, it could further prevent central banks from easing monetary policy and would pose serious challenges to fiscal policy and financial stability.
IMF Report: Global Public Debt Expected to Exceed USD 100 Trillion in 2024
According to the IMF’s latest report titled “Fiscal Monitor: Putting a Lid on Public Debt”, global public debt is expected to exceed USD 100 trillion, which is 93% of global GDP, in 2024 and will approach 100% of global GDP by 2030.
- This projection is 10 bps higher than in 2019, before the COVID-19 pandemic hit.
- The IMF’s latest report has introduced a new “debt-at-risk” approach to examining the risks to debt projections.
Key Findings:
i.According to the report, the world’s two largest economies i.e. China and the United States of America(USA) are the main drivers for increasing global public debt.
ii.The report has estimated that, in a worst-case scenario, global public debt could be 115% of global GDP by 2026, which is almost 20 bps higher than the IMF’s baseline estimate.
iii.The report has outlined certain global factors which are driving the fluctuations in government borrowing costs across the countries and has cautioned that elevated levels of debt in major countries could increase the volatility of sovereign yields and debt risks for others.
iv.According to the report, debt-at-risk varies significantly for different countries, for instance: for advance economies as a group, debt-at-risk has decreased from pandemic peaks and is estimated at 134% of GDP.
- While, for EMDEs debt-at-risk has increased to 88% of GDP.
v.The report suggested that the size of fiscal adjustment which was between 3.0% and 4.5% of GDP, on average (almost the size of past adjustments) could help in bringing the global public debt back under the control.
About International Monetary Fund(IMF):
Managing Director (MD)– Kristalina Georgieva
Headquarters- Washington DC, the United States of America (USA)
Established – 1944
Member nations-190
