Emerging markets have demonstrated remarkable resilience amid recent global shocks, thanks largely to robust monetary policy frameworks and a steadfast commitment to inflation targeting, according to IMF Chief Economist Gita Gopinath. Speaking at an IMF event and sharing her insights on social media, Gopinath highlighted that these countries’ ability to maintain credible inflation control has been key to navigating challenges like the pandemic and the energy crisis.
Gopinath emphasized that clear and consistent communication by central banks is critical to anchoring long-term inflation expectations, especially in uncertain environments. She pointed out that emerging markets face unique challenges, including volatile exchange rates that can trigger market panic, making transparent policy messaging all the more vital.
Among emerging economies, India stands out as the fastest-growing major economy globally, with the IMF projecting growth rates of 6.2% in 2025 and 6.3% in 2026 – significantly outpacing China’s forecasted 4% and 4.6% growth for the same period. This growth comes despite the IMF’s overall global growth downgrade to 2.8% for 2025, affecting 127 countries representing 86% of the world economy.
India’s Reserve Bank has responded proactively by cutting the policy repo rate by 25 basis points to 6%, aiming to stimulate lending and investment amid rising global uncertainties such as trade tensions, fluctuating crude oil prices, and a weakening US dollar. Domestic inflation, particularly food inflation, has eased more than expected, providing some relief, though risks remain from global factors and weather-related disruptions.
Gopinath also underscored the importance of fiscal discipline in supporting monetary policy effectiveness. She cautioned that unsustainable fiscal policies can undermine currency stability and increase risk premiums, complicating central banks’ efforts to maintain price and financial stability.
In summary, the resilience of emerging markets in the face of recent crises owes much to solid monetary frameworks, inflation targeting regimes, and effective communication strategies. As global uncertainties persist, these factors will remain crucial for sustaining growth and stability in these economies.