Asia-Pacific to grow 4.5% in 2024: IMF

The International Monetary Fund (IMF) projects the Asia and Pacific region to grow by 4.5 percent in 2024—an upward revision of 0.3 percentage points from the projection given in October 2023.
With this, Asia would contribute about 60 percent of global growth and the region is projected to grow by 4.3 percent in 2025. While the drivers depend on the country, in China and India, the investments are to contribute disproportionately to growth—much of it public.
In Emerging Asia outside China and India, robust private consumption will remain the main growth engine.

In some advanced economies such as Korea, the IMF expects a positive impulse from exports—driven in part by strong global demand for high-end semiconductors. Domestic demand would strengthen only gradually.
In terms of inflation, going forward, the IMF expects it will converge to central bank targets.
“But this requires a differentiated policy approach: a tighter-for-longer stance in economies where inflation is elevated and accommodative macro-policies in economies with sizeable slack,” said IMF Director Asia and Pacific Department Krishna Srinivasan.
With regard to the US monetary policy matters for Asia, the IMF staff analysis shows that the US interest rates have a strong and immediate impact on the Asian financial conditions and exchange rates. Expectations about the Fed easing have fluctuated in recent months, driven by factors that are unrelated to Asian price stability needs.
“We recommend the Asian central banks to focus on domestic inflation and avoid making their policy decisions overly dependent on anticipated moves by the Federal Reserve. If the central banks follow the Fed too closely, they could undermine price stability in their own countries,” Srinivasan said.

On the fiscal policy front, the IMF recommends the governments to focus on consolidation, to curb the rise in public debt and rebuild fiscal buffers.
The IMF forecasts show that on the current fiscal plans, debt ratios would stabilise for most economies, provided the governments underpin these plans with concrete policies and follow through on them. But even then, debt would remain significantly higher than before the pandemic.
“To reduce debt levels and curtail debt service costs, the governments need to collect more revenue and streamline expenditure. Having to pay less on debt would eventually free up budgetary space for spending on development needs, social safety nets and climate mitigation and adaptation,” Srinivasan said.