India leads global growth with robust investment and consumption: IMF Report

In its earlier World Economic Outlook report on October 2, the IMF maintained India’s GDP growth projections at 7% for FY25 and 6.5% for FY26.

The agency noted that pent-up demand from the Covid-19 pandemic period has now been fully utilized as the economy reconnects with its potential growth path.

The IMF also raised its growth forecast by 0.2 percentage points since April due to an improved agricultural season bolstering rural consumption and sustained expansion in public infrastructure investments.

Growth in Asia is projected to decelerate in 2024 and 2025, reflecting the diminishing effects of post-pandemic recovery and demographic factors such as aging.

However, short-term prospects remain more optimistic than anticipated in April, the report said.

The Asia-Pacific region is expected to account for around 60% of global growth in 2023, although "the outlook is subject to sizable economic and geopolitical uncertainties," the IMF cautioned.

In a related blog post, the IMF noted that Asia’s growth, historically fuelled by manufacturing, may increasingly shift towards modern, tradable services as a new source of productivity.

Services have already drawn nearly half of the region's workforce, a substantial increase from 22% in 1990, as millions moved away from agriculture and manufacturing.

During a recent discussion, Finance Minister Nirmala Sitharaman underscored that job creation remains a critical global challenge, urging the World Bank to address this issue amid ongoing economic challenges and the rapid technological shifts transforming the skills needed for young people entering the workforce.