While the International Monetary Fund (IMF) has upgraded India’s growth forecast for the current financial year it has said that the slowdown in growth this year will be concentrated to advanced economies.
Earlier in the day, IMF predicted that India’s economy will grow at 6.1 per cent in 2023, a 0.2 per cent point upward revision compared with the April projection, reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment.
In its ‘World Economic Outlook’ projections released on July 25, it projected global growth to slow from last year’s 3.5 per cent to 3 per cent this year and the next — a 0.2 percentage points upgrade for 2023 from IMF’s April projections. In advanced economies, including the US, countries in the European Union and the UK, the IMF said the growth will fall from 2.7 per cent in 2022 to 1.5 per cent this year and is estimated to be subdued at 1.4 per cent next year.
“The euro area, still reeling from last year’s sharp spike in gas prices caused by the war, is set to decelerate sharply,” IMF said in its Outlook report.
In contrast, growth in emerging markets and developing economies is still expected to pick-up with a year-on-year growth expected to accelerate from 3.1 per cent in 2022 to 4.1 per cent this year and the next.
With respect to India, IMF has predicted that the economy will grow at 6.1 per cent in 2023, a 0.2 percentage point upward revision compared with the April projection.
India is estimated to account for one-sixth of global growth this year.
“India is a country with growth — very strong and continuing to be strong. It’s about — one sixth of total global growth is accounted for by India right this year, and inflation is back inside the target range in our estimates,” said Daniel Leigh, Division Chief, Research Department, IMF, at a press conference.
IMF said in the latest update of the World Economic Outlook that growth in emerging and developing Asia is on track to rise to 5.3 per cent in 2023, then to 5.0 per cent in 2024, showcasing a 0.1 percentage point downward revision for 2024. It said the forecast for China remains unchanged at 5.2 per cent for 2023 and 4.5 per cent for 2024.
However, consumption growth has evolved broadly in line with April 2023 World Economic Outlook projections. However, investment has underperformed due to the ongoing real estate downturn in China.
Also, IMF added that the inflation could remain high and even rise if further shocks occur, including those from an intensification of the conflict in Ukraine and extreme weather-related events, resulting in more restrictive monetary policy. It said financial sector turbulence could resume as markets adjust to further policy tightening by central banks.
In the United States, growth is projected to slow from 2.1 per cent in 2022 to 1.8 per cent in 2023, the World Economic Outlook Update said.
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