New Delhi: Emerging markets have demonstrated remarkable resilience in the face of recent global crises, thanks to robust monetary policy frameworks and a commitment to inflation targeting, according to IMF chief economist Gita Gopinath.
In a post on the X social media platform, Gopinath highlighted that clear and effective communication would be crucial for central banks to maintain their credibility and anchor inflation expectations during uncertain times.
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“Kudos to emerging markets. They’ve shown tremendous resilience after facing tough challenges like the pandemic and the energy crisis,” Gopinath remarked during a recent IMF meeting, a video of which she shared on X. She noted that this resilience stemmed from the strong monetary frameworks, particularly the inflation-targeting regimes that many countries have built and maintained with credibility.
Among these emerging markets, India stands out as the world’s fastest-growing major economy, with projections indicating that it will be the only country to achieve over 6% growth in the next two years, according to an IMF report. The report, however, has downgraded growth forecasts for over 120 countries.
“Our ‘April 2025 World Economic Outlook’ projects global growth to slow to 2.8% in 2025, with 127 countries—representing 86% of global GDP—experiencing downward revisions,” Gopinath explained.
She added that moving forward, trade policy clarity and predictability would be essential for sustaining growth, alongside addressing structural challenges to rebuild resilience.
India’s economy is forecast to grow by 6.2% in 2025 and 6.3% in 2026, a rate that is more than double the growth forecast for China, which is expected to grow at 4% in 2025 and 4.6% in 2026.
Gopinath emphasised the importance of focusing on sound communication regarding inflation targeting, noting that this would be critical for emerging markets in the coming years.
Meanwhile, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) has reduced the policy repo rate by 25 basis points to 6%, effective immediately. This move is aimed at boosting lending and investment amid growing global uncertainties.
As trade tensions resurface, global economic conditions remain volatile, with fluctuations in crude oil prices, a weakening US dollar, softening bond yields, and corrections in equity markets. Despite these challenges, India’s economic outlook has shown signs of improvement, particularly with a decline in food inflation, offering some relief, though global and weather-related risks remain.
