Informist, Thursday, Apr 25, 2024

--Fin min: Broad-based growth instilling confidence world over
--Fin min: Improvement in major econs shows growth is broad-based
--Fin min: Geopolitical tension a concern, but risks have softened
--Fin min: See rebound in global econ growth, recession fading
--Fin min: India showing broadbased growth, aiding global growth path
--Fin min: India econ performance strong, despite global hurdles

NEW DELHI – The global economic growth landscape is seeing a gradual recovery, aided by fading recessionary fears and broad-based growth in major economies, the finance ministry said today. This broad-based growth is seen despite growth disparities in a few regions and geopolitical tensions remaining a concern.

However, notwithstanding the recent developments, geopolitical risks have softened, offering a potential upside for growth, the ministry said in its Monthly Economic Review for March. "Global economic growth appears to be gradually on the ascent as fears of recession fade," it said. A recession is defined as two consecutive quarters of economic contraction.

"Despite these challenges, leading indicators suggest an overall upturn in economic activity driven by expansion in both the manufacturing and service sectors," it said.

In this global context, India continues to show robust economic performance on the back of sustained demand momentum and investment, among other indicators, it said. "Factors such as strong domestic demand, rural demand pickup, robust investment, and sustained manufacturing momentum have contributed to India's resilience."

The ministry said its view of a broad-based recovery in global growth was in tandem with the International Monetary Fund's view. The IMF had on Apr 16 raised its global growth forecast for 2024 by 10 basis points to 3.2% and maintained its projection for 2025 at 3.2%.

For India, the IMF raised its forecast for GDP growth in the current financial year that started April by 30 basis points to 6.8% on the back of robust domestic demand and a rising working-age population. Despite the upward revision, the IMF's GDP growth forecast for India for the current financial year is lower than the Reserve Bank of India's estimate of 7.0%.

The finance ministry expects GDP growth in the current fiscal to be close to 7.0%. India's

GDP expanded 7.6% in the financial year ended March, as per the second advance estimate given by the Ministry of Statistics & Programme Implementation.

The overall growth in the global economy instils confidence across businesses and governments, the finance ministry said. However, it mentioned that if not for the recent escalation of conflict between Iran and Israel, volatility and uncertainties from geopolitical issues were diminishing.

Geopolitical tensions intensified this month after Iran accused Israel of killing its military commanders in an attack on the Iranian consulate in Syria. Following this, Iran's supreme leader Ayatollah Ali Khamenei said Israel would be punished for the attack and the region has been on edge since then.

This escalation was an extension of the existing complications between Hamas and Israel that have cast a cloud of worry across regions owing to supply disruptions and the resultant price shocks. In that context, global trade has been heavily affected. But the ministry said the pressure on global supply chains has eased, thereby reducing logistical challenges. "Forward-looking indicators paint a picture of optimism and improving sentiments."

Against this background, resilient growth, robust economic activity indicators, price stability, and steady external sector performance continue to support India's promising economic performance and help position itself in a pivotal role for supporting the global growth trajectory, the ministry said. End

Reported by Priyasmita Dutta

Edited by Vandana Hingorani

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