The International Monetary Fund (IMF) has slashed India’s growth forecast for 2022-23 (FY23) by 80 basis points to 7.4 per cent from 8.2%, citing less favourable external conditions and rapid policy tightening by the central bank. However, despite the growth downgrade, India will remain one of the fastest growing major economies in the world in 2022-23 and 2023-24. Only Saudi Arabia, estimated to grow 7.6% in 2022, is expected to outpace India. However, growth in the Kingdom is expected to slow to 3.7% in the following year.
For India, its growth downturn mainly reflects the global downturn which in turn affects the exports of the country and the tightening of the monetary policy is also making it less attractive for investors to invest in the economy and hence contributing to the economic shortfall.
The Global prospect-
- In comparison, China’s growth is estimated to slow to 3.3% in 2022 from 4.4% estimated earlier by IMF.
- Other emerging markets and developing economies, including Russia, South Africa, and Brazil, saw an upward revision in their economic forecasts on improved outlook. The IMF also cut the global growth outlook and warned that the world may soon be on the brink of a recession.
- Global economic expansion will likely slow to 3.2% this year, slower than the 3.6% forecast by the fund in April.
- The fund said that several shocks have hit the world economy which was already weakened by the pandemic like higher inflation, tighter monetary policy, a worse slowdown in the major markets of the world and the negative spillovers from the Russia-Ukraine war.
Important takeaways for all competitive exams:
- IMF Formation: 27 December 1945;
- IMF Headquarters: Washington, D.C., United States;
- IMF Member Countries: 190;
- IMF MD: Kristalina Georgieva.