New Delhi: The International Monetary Fund (IMF) in its most recent World Economic Outlook report has underscored a significant shift in global manufacturing production towards emerging markets such as India and China, as advanced economies experience a decline in competitiveness.
This development signifies that emerging economies, including India, are increasingly assuming pivotal roles within the global manufacturing landscape.
"The report highlights a trend of manufacturing production increasingly gravitating towards emerging market economies, particularly China and India, as advanced economies witness a decline in competitiveness," the IMF stated in its analysis.
Furthermore, the report observed a broader shift in consumer behavior towards services, which is propelling growth in the services sector across both advanced and emerging economies.
However, this shift is concurrently leading to a slowdown in manufacturing activities. Consequently, the global economy is undergoing a rebalancing process between these two sectors.
The IMF further noted that this rebalancing process is likely to enhance activity in the services sector across both advanced and emerging economies, albeit at the expense of manufacturing.
Regarding India, the IMF forecasts a GDP growth rate of 7 percent in 2024. The report indicates that this growth rate is expected to moderate in the coming years, with projections for India's GDP growth to decrease from 8.2 percent in 2023 to 7 percent in 2024 and 6.5 percent in 2025. This reduction is attributed to the exhaustion of pent-up demand accumulated during the pandemic, as the economy stabilizes and begins to align with its potential growth trajectory.
The report attributes this slowdown to the depletion of pent-up demand accumulated during the pandemic, as the economy stabilizes and begins to align with its potential growth trajectory.
On a global scale, the IMF has observed minimal changes in the overall growth outlook since its report in April 2024. Following a robust rebound post-pandemic, global GDP growth has remained around 3 percent in both the short and medium term.
The IMF cautioned that this subdued growth is expected to persist, extending beyond the current period of disinflation, suggesting that the pandemic may have induced a long-term reduction in potential growth across the global economy.
Additionally, the report highlighted the challenges faced by advanced economies while emphasizing the opportunities for emerging markets such as India and China to solidify their positions in the global manufacturing sector.
