New Delhi: The International Monetary Fund (IMF) has lowered the growth rate of India’s GDP forecast for the current year by 60 basis points to 6.8%. However, India is likely to maintain its position as the fastest-growing major economy in the world.
According to the World Economic Outlook report, “The outlook for India is for growth of 6.8 percent in 2022, a 0.6 percentage point downgrade since the July forecast, reflecting a weaker-than-expected outturn in the second quarter (April-June) and more subdued external demand.”
In its July 2022 report, the IMF had pegged India’s GDP growth for 2022 at 7.4 percent. The IMF’s latest projection on India’s GDP growth is lower than the 7 percent growth pegged by the Reserve Bank of India (RBI) for the financial year 2022-23.
However, despite the slowdown, India would remain the fastest-growing major economy.
As per the latest IMF data, India’s GDP growth will slow to 6.8 percent in 2022 from 8.7 percent in 2021. The growth is projected to further slow to 6.1 percent in 2023.
China’s GDP growth is projected to slump to 3.2 percent in 2022 from 8.1 percent in 2021. In 2023, China’s growth is projected to accelerate to 4.4 percent in 2023 but remains sharply down when compared with India’s 6.1 percent projected growth.
The slowdown in global economic activity is broad-based and sharper than expected, with inflation higher than seen in decades. The economic outlook depends on a successful calibration of monetary and fiscal policies, the course of the war in Ukraine, and growth prospects in China.
IMF report further added that risks remain unusually large: monetary policy could miscalculate the right stance to reduce inflation; diverging policy paths in the largest economies could exacerbate the US dollar’s appreciation; tightening global financing could trigger emerging market debt distress, and a worsening of China’s property sector crisis could undermine growth.