'Worst Yet to Come': IMF Dims View on Global Growth, But India 'Doing Very Well'

Growth of the world economy will slow further next year, the International Monetary Fund predicted on Tuesday, downgrading its forecasts as countries grapple with the fallout from the Russia-Ukraine war, persisting effects of the Covid crisis, spiralling cost-of-living, and economic downturns.

The IMF slashed its estimate for India’s GDP growth in the current financial year started April by 60 basis points to 6.8% from a previously expected 7.4%, on account of lower-than-expected growth in April-June and weak external demand. The figure for FY24 was left unchanged at 6.1%.

However, based on the data shared by the UN financial agency, India’s growth story remains on top among advanced and developing economies.

“India is doing very well in 2022 and is expected to grow strongly in 2023 as well,” IMF chief economist Pierre Oliver Gorinches told reporters. “We expect its growth rate to be 6.8% this year and 6.1% next year.”

He added that inflation in India still remains above the target of the central bank.

“This year’s shocks will re-open economic wounds that were only partially healed post-pandemic,” said International Monetary Fund economic counsellor Pierre-Olivier Gourinchas in a blog post accompanying the fund’s latest World Economic Outlook.

In its report, the IMF trimmed its 2023 global GDP forecast to 2.7%, 0.2 points down from July expectations. Its world growth forecast for this year remains unchanged at 3.2%.

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“The worst is yet to come and, for many people 2023 will feel like a recession,” said Gourinchas.

Data released at the end of August showed that the Indian economy grew by 13.5% in April-June, thanks to a favourable base effect. The jump in growth, however, was lower than economists’ forecasts of 15% and the RBI’s projection of 16.2%.

The IMF’s forecast for 2022-23 is 20 bps lower than the projection of the Reserve Bank of India.

The fund foresees China’s economy growing just 3.2% this year, down drastically from 8.1% last year.

The global economy has been bruised, with the war in Ukraine driving up food and energy prices following the Covid pandemic while soaring costs and rising interest rates threaten to reverberate around the globe.

(With agency inputs)

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