The IMF on Tuesday cut India’s economic growth forecast for the current fiscal year to 5.9% from 6.1% earlier.
Post Date – 11:15 PM, Tuesday – 4/11/23
Washington: The International Monetary Fund (IMF) on Tuesday cut India’s economic growth forecast for this fiscal year to 5.9% from 6.1% previously. However, India will continue to be the fastest growing economy in the world.
In its annual World Economic Outlook, the IMF also cut its forecast for the 2024-25 fiscal year (April 2024 to March 2025) to 6.3% from the 6.8% predicted in January this year.
Growth for the 2023-24 financial year is 5.9%, compared to an estimated 6.8% growth for the previous year.
The IMF’s growth forecast is lower than that of the Reserve Bank of India (RBI). The RBI expects GDP to grow by 7% in 2022-23, compared with 6.4% in the current fiscal year starting April 1.
The government has yet to release full-year GDP figures for 2022-23.
World Economic Outlook data shows that India remains the fastest growing economy in the world despite a sharp drop in growth forecast from 6.8% to 5.9% in 2022.
Growth in China is projected to be 5.2% in 2023 and 4.5% in 2024, and 3% in 2022.
On the surface, the global economy appears poised for a gradual recovery from the powerful blow of the pandemic and Russia’s unprovoked war on Ukraine. China is rebounding strongly as its economy reopens.
IMF Chief Economist Pierre-Olivier Gorinchas said supply chain disruptions were easing, while disruptions in energy and food markets caused by the war were receding.
“Meanwhile, large-scale synchronized monetary tightening by most central banks should start to bear fruit, with inflation returning to target.
“In our latest forecast, global growth will bottom out at 2.8% this year before inching up to 3.0% in 2024. Global inflation will ease to 7.0% from 8.7% in 2022, albeit more slowly than initially expected. slow. year and 4.9% by 2024,” he said.
According to him, the slowdown this year has been concentrated in advanced economies, especially the euro zone and the UK, where growth is expected to slow to 0.8% and -0.3% this year before rebounding to 1.4% and 1% respectively.
In contrast, despite a 0.5 percentage point downward revision, many emerging market and developing economies are picking up, with year-end growth accelerating from 2.8 percent in 2022 to 4.5 percent in 2023, he said in a blog post. wrote.
Gourinchas argues that policymakers need steady instruments and clear communication more than ever. Amid financial instability, monetary policy should continue to focus on reducing inflation, but remain ready to adapt quickly to financial developments.
“The silver lining is that turmoil in the banking sector will help slow headline activity as banks lend less. On its own, this should partly alleviate the need for further monetary tightening to achieve the same policy stance.
“But any expectation that the central bank will give up fighting inflation prematurely will have the opposite effect: lowering yields, supporting more activity than is reasonable and ultimately complicating the task of monetary authorities,” he said.
