Inflation in the country is projected to reach around 1.5 per cent this year before converging to the long-term trend of 3 per cent, the IMF said after concluding its 2024 Article IV consultation mission to the country recently.

Inflation has moderated to an average of 1.6 per cent year on year in the first half of 2024, down from 2.1 per cent in 2023.

Credit growth has sharply slowed amidst deteriorating asset quality and high private sector debt, the IMF noted, adding that in the first quarter of 2024, non-performing loans (NPLs) rose to 6 per cent of all loans, reflecting emerging vulnerabilities.

Factors affecting the outlook have shifted to the downside, notably due to weaker-than-projected demand from advanced economies, global economic fragmentation and high domestic private debt.

On the upside, a continued loosening of global financial conditions would support the recovery, the IMF noted.

Structural reforms are needed to diversify growth drivers and improve productivity, it added.

Fibre2Fashion News Desk (DS)