Global lender now forecasts 3.0% growth in global real Gross Domestic Product for 2023, which is an increase of 0.2 percentage points from its April forecast. However, the outlook for 2024 is unchanged at 3.0%.
In India’s case, the IMF raised its growth prospects for 2023 to 6.1 per cent, an increase of 0.2 percentage points from April. This positive revision is due to the momentum gained from stronger-than-expected growth in Q4 2022, driven by strong domestic investment.
However, the IMF’s growth forecast is much lower than the RBI’s estimate of 6.5% growth.
India’s economy picked up significantly and the growth rate reached 6.1% in the March quarter. The boom was driven by increased capital expenditure by both the government and the private sector. Moreover, for the fiscal year ending March 31, 2022, India’s growth stood at an impressive 7.2%, placing it among the top performing economies globally.
For the United States, the IMF raised its growth forecast for this year by 0.2 percentage points from April to 1.8 percent. The increase was attributed to resilient consumption growth in Q1, supported by a still-tight labor market, higher real incomes and a pick-up in vehicle purchases.
With regard to China, the IMF retained its forecast at 5.2 percent, but highlighted a change in composition due to the poor performance of investments, mainly due to issues with the country’s troubled real estate sector.
‘The world is a better place now’
Acknowledging that the world is currently in a better position, the IMF pointed to the current challenges. These include high inflation, which erodes household purchasing power, increased borrowing costs due to rising interest rates, and limited access to credit due to the banking stress that emerged in March. The IMF also noted that international trade and manufacturing indicators indicate further weakness, and excess savings accumulated during the pandemic are declining, leaving fewer buffers to absorb future shocks, especially in advanced economies such as the United States.
(with inputs from agencies)