Gita Gopinath,Chief Economist,IMF
IMF chief economist Gita Gopinath stated that “if we have to take a lesson from it, the reason that they had that resilience was that they built up good, solid monetary policy frameworks, the inflation targeting regime, maintaining that credibility and the commitment to it in an uncertain environment”.
New Delhi: Emerging markets have shown strong resilience through recent crises by building strong monetary policy frameworks and committing to inflation targeting, IMF chief economist Gita Gopinath said on Sunday.
Clear and careful communication will be key for central banks to maintain credibility and anchor inflation expectations in uncertain times, she posted on X social media platform.
“Kudos to emerging markets. They’ve actually demonstrated a lot of resilience after some pretty tough knocks, including the pandemic, including the energy crisis that we saw,” Gopinath said during a recent IMF meeting, a video of which she posted on X.
She further stated that “if we have to take a lesson from it, the reason that they had that resilience was that they built up good, solid monetary policy frameworks, the inflation targeting regime, maintaining that credibility and the commitment to it in an uncertain environment”.
Among the emerging markets, India continues to remain the world’s fastest-growing major economy and the only country expected to clock over 6 per cent growth in the next two years, according to an IMF report, which has trimmed the growth forecast for over 120 countries.
According to the IMF chief economist, “Our ‘April 2025 World Economic Outlook’ projects significantly weaker global growth at 2.8 per cent for 2025 with growth downgrades for 127 countries making up 86 per cent of world GDP.”
The path forward requires clarity and predictability on trade policies. Countries should address structural challenges to rebuild resilience and restore growth momentum, Gopinath added.
The outlook report pegs the Indian economy to grow at 6.2 per cent in 2025 and 6.3 per cent in 2026, which is over 2 percentage points above second-ranked China’s economic growth forecast at 4 per cent for 2025 and 4.6 per cent in 2026.
According to Gopinath, “focusing on sound communication about committing to inflation, targeting on anchoring long-term inflation expectations — that’s going to be very critical for the emerging markets”.
The RBI’s Monetary Policy Committee (MPC), in its 54th meeting and the first of the financial year 2025–26, unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6 per cent with immediate effect.
The repo rate is the rate at which the RBI lends money to commercial banks, and a cut in this rate is aimed at boosting lending and investment.
This decision comes at a time when global economic conditions are becoming increasingly uncertain. Trade tensions have resurfaced, leading to a decline in crude oil prices, weakening of the US dollar, softening bond yields, and corrections in equity markets. While central banks across the world are adjusting their policies to address domestic concerns, they are doing so cautiously.
Within India, the outlook has shown signs of improvement. Inflation, particularly food inflation, has declined more than expected, offering some relief, though global and weather-related risks remain.