Strong Monetary Policies Shield Emerging Markets Amid Global Crises: IMF’s Gita Gopinath
Blitz Bureau
NEW DELHI: Emerging markets have shown remarkable resilience in navigating recent global crises, thanks to strong monetary policy frameworks and a commitment to inflation targeting, said IMF Chief Economist Gita Gopinath on Sunday.
Posting on X (formerly Twitter), Gopinath stressed that clear and careful communication will be crucial for central banks to maintain credibility and anchor inflation expectations during uncertain times.
“Kudos to emerging markets. They’ve shown impressive resilience after facing tough challenges like the pandemic and the energy crisis,” Gopinath said during a recent IMF meeting, sharing a video of her remarks.
She attributed this resilience to the development of solid monetary policy structures, emphasizing that commitment to inflation targeting and maintaining credibility even amid uncertainty made a significant difference.
Among emerging markets, India stands out as the world’s fastest-growing major economy. It is the only country projected to achieve over 6% growth in the next two years, according to the IMF’s latest forecasts, even as the global agency trimmed growth projections for over 120 countries.
“Our ‘April 2025 World Economic Outlook’ projects global growth to weaken significantly to 2.8% in 2025, with downgrades for 127 countries, representing 86% of the world economy,” Gopinath noted.
She further stressed that rebuilding resilience and restoring momentum will require greater clarity and predictability in trade policies, along with addressing structural challenges.
According to the IMF outlook, India’s economy is expected to grow by 6.2% in 2025 and 6.3% in 2026. This is over two percentage points higher than China’s growth projections of 4% and 4.6% for the same years.
Gopinath underlined the importance of strong communication strategies in emerging markets to reinforce their commitment to inflation targeting and to keep long-term inflation expectations anchored.
Meanwhile, India’s central bank has responded to evolving global and domestic conditions. The Reserve Bank of India’s Monetary Policy Committee (MPC), in its 54th meeting and the first of the financial year 2025–26, unanimously decided to cut the policy repo rate by 25 basis points to 6%.
The repo rate — the interest rate at which the RBI lends to commercial banks — was lowered to stimulate lending and investment at a time when global economic uncertainties are rising. Trade tensions, a decline in crude oil prices, a weaker US dollar, softer bond yields, and corrections in equity markets have marked the global financial landscape.
Domestically, India’s outlook has improved with inflation, particularly food inflation, falling more than anticipated, providing some relief. However, Gopinath cautioned that global risks and weather-related factors continue to pose challenges.
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