125 HERITAGE FOODS LTD | 32ND ANNUAL REPORT 2023-24 MDA STRATEGIC REVIEW STATUTORY REPORT FINANCIAL STATEMENTS Management Discussion and Analysis Global economy The International Monetary Fund (IMF) has reported that the global economy began 2024 on a stable footing and has estimated a growth rate of 3.1% for the year. This is projected to further increase to 3.2% in 2025. This growth is anticipated to be primarily driven by the resilience of the US economy, several large emerging markets and developing economies, along with fiscal support in China that will help stabilise the country’s economy. These positive indicators notwithstanding, potential challenges may arise due to factors such as continued monetary policy tightening to control inflation, withdrawal of fiscal support, and low underlying productivity growth. It is important for central banks and policymakers to navigate these hurdles with a long-term lens to ensure sustained and homogenous economic growth in the coming years. Global economic growth (Source:https://www.imf.org/en/Publications/WEO/ Issues/2024/01/30/world-economic-outlook-updatejanuary-2024) [*Emerging Market and Developing Economies] [**Projected] For advanced economies, growth is projected to decline slightly from 1.6% in 2023 to 1.5% in 2024 before rising to 1.8% in 2025. An upward revision of 0.1% point for 2024 reflects stronger-than-expected US growth, partly offset by weaker-than-expected growth in the euro area. Growth in the euro area is projected to recover from its low rate of an estimated 0.5% in 2023, which reflected relatively high exposure to the war in Ukraine, to 0.9% in 2024 and 1.7% in 2025. Stronger household consumption as the effects of the shock due to energy prices subside and inflation falls, supporting real income growth, is expected to drive the recovery. In emerging market and developing economies, growth is expected to remain at 4.1% in 2024 and rise to 4.2% in 2025. GDP growth in China is estimated at 4.6% in 2024 and 4.1% in 2025, backed by stronger-than-expected growth in 2023 and increased government spending on capacity building, infrastructure, etc. Growth in India is projected to remain strong at 6.5% in both 2024 and 2025, reflecting resilience in domestic demand, backed by government policies, such as PLI, etc. According to IMF, global headline inflation is expected to moderate to 5.8% in 2024 and 4.4% in 2025, but still it would be above pre-pandemic (2017–19) levels of about 3.5%. Advanced economies are expected to see faster disinflation, with inflation declining by 2 percentage points in 2024 to 2.6%. For emerging market and developing economies inflation is expected to decline by just 0.3 percentage points to 3.1%. Global trade growth is projected to grow at 3.3% in 2024 and 3.6% in 2025, below its historical average growth rate of 4.9%. Rising trade distortions and geoeconomic fragmentation are expected to continue to weigh on global trade. However, growing government and private spending, real disposable income gains supporting consumption amid still-tight – though easing – labour markets and households drawing down on their accumulated pandemic-era savings may support relative buoyancy in trade growth. Outlook The global economy is improving, largely due to the strength of the U.S. economy, but global growth is expected to be slow due to tight monetary policy, restrictive financial conditions, and sluggish trade and investment. U.S. GDP growth is forecasted to be supported by robust household spending and a strong labour market. In contrast, growth in the Euro area and China is projected to slow down. While there are positive developments, challenges remain that could impact growth, including geopolitical tensions, financial strain, inflation, trade disruptions and climate-related disasters. Strong and synchronous global cooperation is the need of the hour to address these challenges. Emerging market and developing economies (EMDEs), especially commodity exporting countries, face challenges related to fiscal policy pro-cyclicality and volatility. Effective policies and strong institutions are essential for boosting investment and enhancing long-term prospects across all EMDEs. The medium-term outlook for many developing economies, especially those with major interlinkages to global supply chains, has dimmed due to slowing growth in large developed economies, sluggish global trade, and stringent financial conditions. Borrowing costs for developing economies are expected to remain high as global interest rates remain at four-decade highs in terms of inflation-adjusted terms.
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