IMF projection: Global growth at mere 2.7 per cent in 2023, India’s at 6.1 per cent

According to IMF Chief Economist Pierre-Olivier Gourinchas, India has been doing extremely well in 2022 and is predicted to develop very strongly in 2023.

The Indian economy is performing reasonably well, according to the International Monetary Fund, but more monetary tightening is needed. IMF Chief Economist Pierre-Olivier Gourinchas announced that the organization’s estimate of India’s GDP growth in 2022 has been revised downward to 6.8%.

India’s anticipated growth for 2022 has been lowered by 0.6 percentage points since the July prediction, to 6.8%, according to the IMF’s annual World Economic Outlook report. The updated forecasts take into account a more muted external demand and a weaker-than-anticipated second quarter result.

According to Gourinchas, who spoke to the media, India’s growth rate was 8.7% in the fiscal year 2021–2022; the country has been doing very well in 2022 and is anticipated to grow fairly robustly in 2023. The IMF anticipates that India will grow at a rate of 6.8% this year and 6.1% the following year.

According to the IMF Chief Economist, tighter financial conditions and primarily the external outlook are to blame for the lower adjustment in 2022. In addition, the growth revision for the first quarter of the fiscal year was worse than anticipated.

Gourinchas observed that India’s inflation remains higher than the objective set by the central bank. According to him, India’s inflation, which is predicted to reach 6.9% in 2022–2023, could drop to 5.1% in 2023–2024. As a result, the IMF thinks that the overall monetary and fiscal policy stance should probably be tightening.

According to Daniel Leigh, division chief of the IMF’s Research Department, additional monetary tightening measures are anticipated to cause inflation to return to the 4% range in 2023–2024.

Global growth is anticipated to drop overall, from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. With the exception of the global financial crisis and the severe period of the COVID-19 epidemic, the IMF claims that this is the poorest growth profile since 2001.