IMF highlights significant manufacturing shift towards India and China

According to the IMF report, this trend is positioning countries such as India as major players in the global manufacturing sector.

"Manufacturing production is increasingly moving towards emerging market economies—particularly China and India—as advanced economies lose competitiveness," the IMF stated.

The report also identified a broader shift in consumer preferences, with a growing demand for services over goods.

This change is driving expansion in the services sector in both developed and emerging markets but is contributing to a slowdown in manufacturing.

"This rebalancing is boosting activity in the services sector but dampening manufacturing," the IMF added.

For India, the IMF projects a GDP growth rate of 7 percent in 2024, down from 8.2 percent in 2023.

The report anticipates further moderation, with growth projected at 6.5 percent in 2025.

This deceleration is attributed to the fading of pent-up demand from the pandemic period, as the economy returns to its stable growth trajectory.

Globally, the IMF's projections remain largely unchanged since its April 2024 report.

It forecasts global GDP growth to hover around 3 percent in both the short and medium term.

The IMF cautioned that this period of sluggish growth could extend beyond current disinflation trends, indicating that the pandemic may have caused a long-term decline in potential growth rates.

While the report acknowledged challenges faced by advanced economies, it emphasized the opportunity for emerging markets like India and China to solidify their positions in global manufacturing, capitalizing on shifting dynamics in the global economy.