Representative file image. , Photo Credit: MA Sriram
The International Monetary Fund (IMF) on January 31 said that it expects some slowdown in the Indian economy in the next financial year and projected a growth of 6.8% to 6.1% during the current fiscal year ending March 31. .
IMF released on Tuesday January update of its World Economic OutlookAccording to which global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then increase to 3.1% in 2024.
“In fact our growth projections for India are unchanged from our October outlook. We have a growth of 6.8% for this current fiscal, which runs till March, and then we are expecting some deceleration to 6.1% in FY2023. Director of Research Department of IMF told reporters here.
“Growth in India will slow down from 6.8% in 2022 to 6.1% in 2023, before recovering to 6.8% in 2024,” said the IMF’s World Economic Outlook update.
According to the report, growth in emerging and developing Asia is expected to pick up to 5.3% and 5.2% in 2023 and 2024, respectively, following an expected 4.3 percent slowdown in 2022 due to China’s economy.
China’s real GDP slowdown in the fourth quarter of 2022 means a 0.2 percentage point drop for 2022 growth to 3.0% – with China’s growth below the global average for the first time in more than 40 years. Growth in China is projected to pick up to 5.2% in 2023, reflecting a rapid recovery in mobility, and slow to below 4% in 2024 in the medium term amid a decline in business mobility and slow progress on structural reforms. It is expected to fall to 4.5%.
“Overall, I would like to point out that emerging market economies and developing economies as a whole are already on their way out. We have a modest growth trajectory for the region from 3.9% in 2022 to 4% in 2023,” Mr. Gourinches said.
“Another relevant point here is that if we look at both China and India together, they account for almost 50% of world growth in 2023. So a very significant contribution,” he said.
“I want to say, we had a positive outlook on India in our October forecast. That positive outlook is largely unchanged,” Mr Gourinchas said in response to a question.
In a blog post, he wrote that India remains a bright spot. Together with China, it will account for half of global growth this year, compared to just a 10th for the US and the euro zone combined, he said.
For advanced economies, the slowdown will be more pronounced, falling from 2.7% last year to 1.2% and 1.4% this year and next. Nine out of 10 advanced economies are likely to enter recession, Mr. Gourinchas said.
US growth will slow to 1.4% in 2023 as the Federal Reserve’s interest rate hikes work their way through the economy. He said the euro area situation is more challenging, despite signs of resilience to the energy crisis, a mild winter and generous fiscal support.
“With a tightening of monetary policy by the European Central Bank, and a negative terms-of-trade shock – caused by a rise in the price of its imported energy – we expect growth to slow to less than 0.7 per cent this year,” Mr. Gorynchus wrote.