World Economic Outlook: IMF
The latest edition of the International Monetary Fund’s (IMF) World Economic Outlook cut its forecast for India’s Gross Domestic Product (GDP) growth in FY 2022-23 to 8.2%, making it the fastest-growing major economy in the world, almost twice faster than China’s 4.4 %.
IMF’s Growth Forecast:
- It has also lowered India’s growth projection by 0.8 % points for 2022-23 from its previous forecast (9%) for the same period in 2021.
- In 2021, India registered a growth rate of 8.9 %.
- In 2023-24, India is estimated to grow at 6.9 %.
- With import bills rising due to high commodity and fuel prices, the IMF estimates India’s current account deficit to widen to 3.1% in FY 2022-23 from 1.6% in FY 2021-22.
- India was “suffering like many other countries because of the Russia –Ukraine war and negative terms of trade shock “due to higher food and energy prices weighing down trade balances.
- Additionally, external demand was also softening as the rest of the world’s growth was impacted.
- The IMF has projected global growth at 3.6 % in 2022 and 2023, 0.8 and 0.2 % lower than in the January 2022 forecast, respectively.
- A deceleration in global growth dampens India’s growth prospects especially because it would lead to lower demand for Indian exports.
- The downgrade largely reflects the war’s direct impacts on Russia and Ukraine and global spillovers.
- The recent lockdowns in key manufacturing and trading hubs such as Shenzhen and Shanghai (China) due to the resurgence of covid cases would likely compound supply disruptions elsewhere in the region and beyond.