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IMF recent report on India's and China's economic prospects

10 Oct 2023 Zinkpot 225
IMF recent report on India's and China's economic prospects
  1. The International Monetary Fund in its latest World Economic Outlook has cut China’s 2023 growth forecast to 5% from 5.2%, according to a report published on Tuesday. The IMF also slashed its 2024 estimate to 4.2 percent from 4.5%.
  2. According to the IMF, the property and lending crisis in China could leech further into their domestic economy and beyond showcasing the urgency of government efforts to resolve them. 
  3. Moreover, the developer debt and the failure of local government financing vehicles to pay back loans could unravel optimism about a soft landing of the global economy and an easing of inflation. It also warned of a sharp repricing of assets without action.
  4. The IMF added that the continued turmoil in the property sector could spread to the financial sector and local governments with significant dependence on property-related revenues, weighing on already weakening recovery.
  5. China’s real estate investment declined by 8.8 percent from a year earlier in the January-August period.
  6. The IMF also called out Chinese banks as another hotspot because of the consensus forecast pointing towards lower bank profitability.
  7. As for India, the International Monetary Fund revised India’s 2023 growth forecast upwards to 6.3%, in line with its unchanged outlook for 2024. 
  8. The IMF expects India’s growth to be the highest among developing economies as global economic growth slows down for various reasons including Russia’s 20-month war on Ukraine and the Israel-Hamas conflict.
  9. Overall, the IMF at its annual meeting said that the global economy had shown remarkable resilience as it continues to recover from the COVID-19 pandemic and other global risks including the cost-of-living crises in several countries. 
  10. However, in its World Economic Outlook, the IMF also noted that growth remains slow and uneven with growing global divergence.
  11. The IMF’s global growth estimate is 3% for this year and its 2024 assessment has been cut to 2.9%, down 0.1% percent from the previous forecast in July.
     

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