a sustainable downward path . The successful formation of the new government is an opportunity to implement decisive and comprehensive reforms to boost productivity and support sustained and inclusive growth ,” it said .
“ The recovery is expected to be gradual in 2023 and accelerate in 2024 , amidst a highly uncertain global environment . Growth is projected to increase to 3.6 per cent in 2024 , 0.4 percentage points higher than our projection in mid-October , driven by improvements in external demand and continued solid growth in private consumption . Headline inflation is projected to average 1.3 per cent in 2023 , helped by continued measures to keep energy prices low and further improvements in global supply chains . With strengthening growth in 2024 , headline inflation is expected to slightly accelerate to 1.6 percent ,” it added .
Factors such as heightened global uncertainty ; the prospects of tighter-for-longer global financial conditions ; weakening global growth ( including in China ) and risks of sharp commodity prices fluctuations ( stemming from an escalation of the conflict in the Middle East ) put an extra premium on prudent macroeconomic management .
Malaysia in view
IMF Staff completed its 2024 Article IV Mission to Malaysia in December 2023 .
“ The Malaysian economy has weathered external headwinds well and is projected to grow at four per cent in 2023 . Private consumption remained the main driver of growth throughout the year , supported by a healthy labour market . Exports to major trading partners weakened markedly due to subdued external demand and the economic slowdown in China . Headline and core inflation have been moderating , the latter more gradually , with headline inflation projected at 2.9 per cent in 2023 . Inflation expectations remained well anchored ,” it said .
“ Growth is projected to pick up slightly to 4.3 per cent in 2024 , supported by resilient private consumption and investment and a rebound in public spending . Inflation is projected to moderate further to 2.7 per cent in 2024 , although uncertainties around the inflation outlook remain , including on account of subsidy reform ,” continued the IMF .
The outlook in India
“ India ’ s economy showed robust growth over the past year . Headline inflation has , on average , moderated although it remains volatile . Employment has surpassed the pre-pandemic level and , while the informal sector continues to dominate , formalisation has progressed . The financial sector has been resilient — strongest in several years — and largely unaffected by global financial stress in early 2023 ,” commented the IMF in December 2023 .
“ The current account deficit in FY2022 / 23 widened as the post-pandemic recovery of domestic demand and transitory external shocks outweighed the impact of robust services exports and proactive diversification
Sunset in Mumbai , India . Image : Yash Bhardwaj , Unsplash .
Kuala Lumpur , Malaysia . Image : Yana Marudova , Unsplash .
Shibuya , Japan . Image : Jezael Melgoza , Unsplash .
of critical oil imports . While the budget deficit has eased , public debt remains elevated and fiscal buffers need to be rebuilt . Globally , India ’ s 2023 G20 presidency has demonstrated the country ’ s important role in advancing multilateral policy priorities ,” it added .
It expects growth to remain strong , supported by macroeconomic and financial stability . Real GDP is projected to grow at 6.3 per cent in FY2023 / 24 and FY2024 / 25 . Headline inflation is expected to gradually decline to the target although it remains volatile due to food price shocks . The current account deficit is expected to improve to 1.8 percent of GDP in FY2023 / 24 as a result of resilient services exports and , to a lesser extent , lower oil import costs .
“ Going forward , the country ’ s foundational digital public infrastructure and a strong government infrastructure programme will continue to sustain growth . India has potential for even higher growth , with greater contributions from labour and human capital , if comprehensive reforms are implemented ,” added the IMF , although it also cautioned that “ a sharp global growth slowdown in the near term would affect India through trade and financial channels ”.
Bangladesh and Japan
The IMF Executive Board completed the first review of the IMF-supported programme in Bangladesh and the Article IV consultations in December 2023 .
“ Bangladesh ’ s economy has continued to face economic challenges . External headwinds , coupled with initially inadequate domestic policy response , have made macroeconomic management challenging . An unprecedented reversal of the financial account deteriorated the overall balance of payments in FY2023 , leading to continued pressures on FX reserves and the Taka . In response to these shocks , the authorities have taken several measures ,” commented the IMF .
“ In the near-term , the focus should be on containing inflation and rebuilding external resilience . This would require a calibrated monetary policy tightening , which is supported by prudent fiscal policy stance . In addition , we also need to focus on growth – boosting reforms ,” it added .
In December 2023 , the IMF confirmed that it expected Japan ' s economic recovery to continue but added that it does face some headwinds .
“ Our projections for Japan are 2.5 per cent for headline CPI inflation in 2022 , 3.2 per cent in 2023 and 2.9 per cent in 2024 . Around this forecast , we see the risks as balanced . There could be upside risks to inflation and through second-round effects from higher wages , and there could be downside risks that could stem from a global slowdown ,” it concluded . n
44 | ismr . net | ISMR February 2024