Based on the International Monetary Fund's regional economic projection, the persistent economic growth of India will help Asia grow by 4.6% this year, up from 3.8% the year before, along with China's recovery.
According to the IMF, Asia-Pacific will be the most active of the world's major regions in 2023, mostly due to the optimistic view for China and India. This year, the two largest developing market economies in the area are anticipated to provide around half of global growth, with the remaining 20% coming from the remainder of the region.
The agency predicted 5.9% growth for India this fiscal year last month.
The IMF pointed out that domestic demand in Asia has so far remained strong despite monetary tightening.
According to the multilateral organisation, "we project the region will contribute around 70% of global growth this year as its expansion accelerates to 4.6% from 3.8% last year," adding that China's reopening will give a new impetus. The forecast for October was upgraded by 0.3 percentage points to this.
The IMF stated that while growth in the remainder of Asia is anticipated to peak in 2023, in line with other regions, it will be predominantly driven by China's resurgence and India's tenacious rise.
The Chinese economy is expected to expand by 5.2% in 2023 in the wake of a strong recovery in private consumption amid rapid economic reopening. But the growth momentum will begin to slow in India as softening domestic demand offsets strong external services demand. Growth in India is expected to moderate slightly from 6.8% in the year ended March to 5.9% this year, the IMF said.
India’s official forecast for FY24 is 6.5% expansion. Late last month, the finance ministry flagged downside risks to the official forecast arising from oil production cuts by OPEC, troubles in the financial sector in developed markets hitting cash flows and deficient monsoon rains from El Nino which could impact farm output and prices.
The IMF’s 5.9% growth projection for India for the current fiscal made in April is a downgrade of 0.2 percentage points from its January estimate, owing to turmoil in the financial system which in turn will likely hurt global growth.
India’s economy is expected to have grown at 7% in FY23. Officials also expect cleaner balance sheets of companies and banks would aid a recovery in private investment.