IMF Highlights Manufacturing Shift to India and China

In the most recent World Economic Outlook report, the IMF pointed out a major global trend in manufacturing production moving to emerging markets such as India and China, while advanced economies are becoming less competitive.

This trend shows that countries such as India are becoming significant contributors in the global manufacturing sector.

"Manufacturing production is also increasingly shifting toward emerging market economies--in particular, China and India--as advanced economies lose competitiveness" said IMF in its report.

The IMF report mentioned a wider change in consumer behavior towards services instead of goods. This change is driving expansion in the services industry in both developed and developing economies. Nevertheless, it is also causing a decrease in production levels. Therefore, the global economy is currently experiencing a shift in balance between these two industries.

IMF added "This rebalancing is tending to boost activity in the services sector in advanced and emerging markets but is dampening manufacturing."

For India, the IMF projects a GDP growth at 7 per cent in 2024. The IMF report stated that the GDP will moderate in the coming years. "In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted" the report added.