Asian giants India and China are expected to account for half of the global growth in 2023, said the International Monetary Fund (IMF) managing director Kristalina Georgiva. She also added that the world economy is expected to grow at lower than 3 per cent this year.
Georgieva’s remarks came ahead of the meetings of the IMF and World Bank upcoming week, where the most pressing issues of the global economy would be discussed by policymakers. The meetings will take place against the backdrop of central banks (across the world) hiking interest rates in a bid to curb skyrocketing inflation rates.
She pointed out that, “The period of slower economic activity will be prolonged, with the next five years witnessing less than 3 per cent growth, our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades.”
“Some momentum comes from emerging economies — Asia especially is a bright spot. India and China are expected to account for half of global growth in 2023. But others face a steeper climb,” she explained.
The major causes because of which the world economy would continue to see a sharp slowdown comes with the backdrop of the Covid-19 pandemic and the aftermath of the Russia-Ukraine war. But for how long is this slow growth phase going to last? The IMF believes that the phase of slower economic activity will be prolonged as the next five years will witness less than 3 per cent growth.
“After a strong recovery in 2021 came the severe shock of Russia’s war in Ukraine and its wide-ranging consequences — global growth in 2022 dropped by almost half, from 6.1 to 3.4 per cent,” Georgieva said.
About 90 per cent of advanced economies are projected to see a decline in their growth rates this year, she said. For low-income countries, higher borrowing costs come at a time of weakening demand for their exports, she said.
Georgieva added that while the global banking system had “come a long way” since the 2008 financial crisis, “concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks.
While the West, including the EU, is facing fresh headwinds in the wake of the banking collapse, India’s economic growth has so far been resilient. The IMF chief’s projections are closely aligned with the Reserve Bank of India’s estimates, which has pegged India’s Gross Domestic Product (GDP) at 7 per cent for 2023.
It is a turbulent time for the developed world as they are reeling from their economic upheavals. On the other hand, Asian giants like India has a promising future as the economic ecosystem is on the path of economically sound reforms which is vital for the foundation of the Indian economy. This is a good indication, as the numbers are soaring high for India.
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