IMF Cuts India GDP Growth Forecast To 6.8% For FY23
For FY24, GDP growth forecast has been retained at 6.1%.
The International Monetary Fund has cut India’s growth forecast for the ongoing financial year.
The IMF has forecast India's GDP growth at 6.8% for FY23, according to the latest edition of its World Economic Outlook, published on Tuesday. It is 60 basis points lower than the forecast in July and 140 basis points lower than the forecast in April this year.
The outlook for India reflects a weaker-than-expected out-turn in the second quarter and more subdued external demand, the report said.
For FY24, the GDP growth forecast has been retained at 6.1%.
Latest forecasts project global growth to remain unchanged in 2022 at 3.2%, and to slow down to 2.7% in 2023—0.2 percentage points lower than the July forecast—with a 25% probability that it could fall below 2%, the WEO report said.
More than a third of the global economy will contract this year or the next, while the three largest economies—the United States, the European Union, and China—will continue to stall, it said.
"In short, the worst is yet to come, and for many people 2023 will feel like a recession."
According to the report, the global economy continues to face steep challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.
Global inflation is expected to peak in late 2022, but may remain elevated for longer than previously expected—decreasing to 4.1% by 2024, the WEO report said.
"The 2022 shocks will re-open economic wounds that were only partially healed following the pandemic."
Downside risks to the outlook remain elevated, while policy trade-offs to address the cost-of-living crisis have become acutely challenging, it said.
According to the IMF, the risk of monetary, fiscal or financial policy miscalibration has risen sharply at a time when the world economy remains historically fragile and financial markets are showing signs of stress.
Increasing price pressures remain an immediate threat to current and future prosperity by squeezing real incomes and undermining macroeconomic stability, it said.
According to it, central banks around the world are now laser-focused on restoring price stability, and the pace of tightening has accelerated sharply.
"There are risks of both under and over-tightening," it said.
Amid a weakening global outlook, the World Bank, too, cut India’s GDP growth forecast to 6.5% for FY23 from 7.5% projected in June, according to its South Asia economic focus report for October 2022.