IMF India GDP: IMF sees India’s FY23 growth slowing to 7.4% | India Business News – Times of India

NEW DELHI: The Indian economy is estimated to grow by 7.4% in current fiscal (2022-23). This is sharply slower than the International Monetary Fund’s (IMF’s) earlier forecast of 8.2% due to the impact of war in Ukraine, surging inflationary pressures and rapid interest rate hikes.
In its latest World Economic Outlook update, the IMF on Tuesday also lowered the growth projections for the global economy. It pointed out that the stalling of growth in the US, China and the euro area has major consequences for global outlook.
It said that for emerging markets and developing economies, the negative revisions to growth in 2022-23 reflect mainly the sharp slowdown of China’s economy and the moderation in India’s economic growth.
“The revision in emerging and developing Asia is correspondingly large, at 0.8 percentage points in the baseline for 2022. This revision includes a 1.1-percentage-point downgrade to growth in China, to 3.3% (the lowest growth in more than four decades, excluding the initial Covid crisis in 2020), owing primarily to the aforementioned Covid outbreaks and lockdowns,” according to the IMF document. “Likewise, the outlook for India has been revised down by 0.8 percentage points to 7.4%. For India, the revision reflects mainly less favourable external conditions and more rapid policy tightening,” said the IMF update.

The latest projections by the IMF enable India to retain its fastest growing major economy tag for the current fiscal year and the next. The growth estimates for India are in line with the RBI’s, which projected growth of 7.2% in the current fiscal year. Several other multilateral agencies have also projected growth in the 7.2% range. India’s economy is estimated to grow by 6.1% in 2023-24, 0.8 percentage points down from the earlier estimate of 6.9%.
The IMF said downgrades for China and the US, as well as for India, are driving the downward revisions to global growth during 2022-23, which reflect the materialisation of downside risks highlighted in the April 2022 World Economic Outlook. These are a sharper slowdown in China due to lockdowns, tightening global financial conditions associated with expectations of steeper interest rate hikes by major central banks to ease inflation pressure, and spillovers from the war in Ukraine.
It said the baseline forecast is for global growth to slow from 6.1% last year to 3.2% in 2022, 0.4 percentage points lower than in the April 2022 World Economic Outlook. Global inflation has been revised up due to food and energy prices as well as lingering supply-demand imbalances, and it is anticipated to reach 6.6% in advanced economies and 9.5% in emerging market and developing economies this year – upward revisions of 0.9 and 0.8 percentage points, respectively. In 2023, disinflationary monetary policy is expected to bite, with global output growing by just 2.9%, the IMF said.
“With increasing prices continuing to squeeze living standards worldwide, taming inflation should be the first priority. Tighter monetary policy will inevitably have real economic costs, but delay will only exacerbate them. Targeted fiscal support can help cushion impact on the most vulnerable, but with government budgets stretched, such policies will need to be offset by increased taxes or lower government spending,” the IMF report cautioned.