IMF cuts India's economic growth forecast to 9% in FY22

The Indian economy had contracted by 7.3 per cent in fiscal 2020-21. IMF's forecast for this fiscal is less than the Central Statistics Office (CSO) prediction of 9.2 per cent and the Reserve Bank of India’s forecast of 9.5 per cent.

The IMF forecast is lower than the 9.5 per cent projection by S&P and 9.3 per cent by Moody's, but more than the 8.3 per cent projection by the World Bank and 8.4 per cent by Fitch.

According to IMF, India’s prospects for 2023 are marked up on expected improvements to credit growth and, subsequently, investment and consumption, building on better-than-anticipated performance of the financial sector.

IMF said that global growth is expected to moderate from 5.9 per cent in 2021 to 4.4 per cent in 2022, half a percentage point lower for 2022 than in the October WEO, largely reflecting forecast markdowns in the two largest economies—the United States and China, a news agency reported.

A revised assumption removing the Build Back Better fiscal policy package from the baseline, earlier withdrawal of monetary accommodation, and continued supply shortages produced a downward 1.2 percentage-point revision for the United States, it said.

The global growth is expected to slow to 3.8 per cent in 2023.

In a blog post, IMF’s chief economist Gita Gopinath wrote that the continuing global recovery faces multiple challenges as the pandemic enters its third year.

The rapid spread of the Omicron variant has led to renewed mobility restrictions in many countries and increased labour shortages, she said.

Supply disruptions still weigh on activity and are contributing to higher inflation, adding to pressures from strong demand and elevated food and energy prices, Gopinath added.

Fibre2Fashion News Desk (DS)