News and Articles

IMF Forecasts An Estimated 3.4% In 2022 To 2.9% In 2023 Dip In Global Growth And A 6.1% Growth In India In FY24

The International Monetary Fund (IMF) has predicted that India will be the fastest-growing economy in FY24, keeping the projection at 6.1% in its recent World Economic Outlook, noting "resilient" regional demand in spite of a difficult external environment. But the growth is anticipated to estimated slowdown from 6.8% in FY23 and then recover to 6.8% in FY25.

The report by IMF came prior to the Union budget FY24, which is anticipated to support the country's economy from international headwinds and geopolitical tension whilst adhering to the course of fiscal consolidation.

India's growth will sink from 6.8% between 2022-23 to 6.1% between 2023-24, prior to gaining an uptick in 2024, to 6.8%, with resilient demand from the domestic sector in spite of external headwinds. The forecast aligns with the projected 6.8% GDP growth for 2022-23 by the Reserve Bank of India.

It emphasised that the tightening of the monetary policy to combat inflation and geopolitical uncertainty because of the current Russia-Ukraine crisis will keep on weighing the global economic activity in 2023.

But the rapidly developing covid-19 in China hampered 2022 growth, and the latest reopening is paving the way for a faster-than-anticipated recovery.

Earlier in the month, it was projected by the National Statistical Office in India that the economy would boost by 7% in 2022-23, according to the first advanced estimates.

As per November's Official data, the economic growth slowed to 6.3% during the July-September quarter from 13.5% in the last three months because of the gloomy performance of the manufacturing sector.

It was predicted by the multilateral agency that global growth will dip from the calculated 3.4% in 2022 to 2.9% in 2023, followed by a rise to 3.1% in 2024.

The 2023 forecast is 0.2 percent points more elevated than expected in the October 2022 WEO though lesser than the historical (2000–19) 3.8% average.

The risk balance is tilted in the downside direction; however, negative impacts have been moderated since the October 2022 WEO. On the brighter side, a more substantial boost from pent-up demand in multiple economies or a more rapid decline in inflation is plausible. But on the downside, adverse health consequences in China might hold down the recovery, and the Russia-Ukraine war might escalate, and restricted global financing conditions might aggravate debt distress.

It included those economic markets might as well reprice unexpectedly as a response to negative news of inflation, whilst further geopolitical fragmentation might hinder financial progress.

Whilst Saudi Arabia is cast as the most rapidly developing economy at 8.7% in 2022, its growth will likely slowdown in 2023 to 2.6%. In 2023, China's growth is assessed to improve to 5.2% from 3% in 2022. As per IMF, the UK will witness a 0.6% decline in its gross domestic product in 2023, hinting at a recessionary outlook. It is estimated that growth in the US will slow down from 2% in 2022 to 1.4% in 2023.

Based on inflation, around 84% of countries are expected to have lower headline inflation in 2023 compared to 2022. It predicts that global inflation will fall to 6.6% in 2023 from 8.8% in 2022 and to 4.3% in 2024.

It anticipated inflation in India to be at 6.9% in 2022-23, and it will slowly bounce back to RBI's tolerance band of 4-6% the following year, displaying promising base effects (including for food inflation), the impact of tightening monetary policy, as well as well-anchored long-term inflation expectations. However, it also warned about the threat of second-round effects from price shocks of fuel and commodities staying elevated despite India's long-term inflation predictions remaining relatively well-balanced.

According to the above-mentioned article by Procurement Resource, The International Monetary Fund (IMF) predicts that India will be the fastest-growing economy in FY24, with a projection at 6.1% in its recent World Economic Outlook, covering resilient domestic demand despite a challenging external environment. However, the IMF also hinted at a global dip in the growth of around 2.9% In 2023.