In its latest World Economic Outlook report, released on Tuesday, the International Monetary Fund lowered its forecast for India’s FY23 GDP growth to 8.2% from 9%, owing to a combination of weaker domestic demand (as higher oil prices are expected to weigh on private consumption and investment) and a drag from lower net exports.
In addition, the international agency decreased India’s FY24 growth prediction by 20 basis points to 6.9%, down from 6.9% in January.
In addition, CPI-based inflation in the country is expected to be 6.1 % in FY23 and 4.8 % in FY24. In its WEO prediction for FY24, the IMF added further.
The World Bank had previously cut India’s GDP prediction for FY23 to 8%. Meanwhile, the Reserve Bank of India (RBI) has slashed India’s GDP forecast for the current fiscal year to 7.2 %.
Meanwhile, the IMF lowered its global growth prediction by nearly a full %age point, citing Russia’s war in Ukraine as a reason, and warned that inflation had become a “clear and present concern” for many countries.
China, which grew at an annual rate of 8.1% in 2021, is expected to increase at a pace of 4.4 % in 2022 and 5.1 % in 2023. The United States is expected to increase at 3.7 % in 2022, compared to 5.7 % in 2021. According to the IMF report, the country’s growth forecast for 2023 has been lowered to 2.3 %.
According to the IMF’s analysis, the war is anticipated to reduce growth and raise prices further, even though its forecast is defined by “unusually significant uncertainty.”
Further restrictions on Russian energy and a broadening of the conflict, as well as a faster-than-expected downturn in China and a new outbreak of the epidemic, could weaken the economy and raise inflation, triggering social discontent.
Given the war’s direct repercussions on Russia and Ukraine, as well as global spillovers, the global lender reduced its estimates for the second time this year, now projecting global growth of 3.6 % in 2022 and 2023, down 0.8 and 0.2 %age points from its January forecast.
Global growth is predicted to slow to around 3.3 % in the medium term, down from an average of 4.1 % from 2004 to 2013, and 6.1 % in 2021.