The International Monetary Fund (IMF) on Tuesday cut gross domestic product (GDP) growth forecast for India for FY23 by 80 basis points to 7.4 per cent. According to report, the growth forecast has been slashed by IMF because of less favourable external conditions and rapid policy tightening by the Reserve Bank of India (RBI).
In an update to its World Economic Outlook report, the IMF on Tuesday said, “For India, the revision reflects mainly less favourable external conditions and more rapid policy tightening.”
The IMF said that a tentative global recovery in 2021 was followed by “increasingly gloomy developments” in 2022 as several shocks hit the world economy, including tighter financial conditions led by higher-than-expected inflation worldwide, a worse-than-anticipated slowdown in China, and negative spillovers from the war in Ukraine.
IMF in its World Economic Outlook Update: Gloomy and More Uncertain, said, “…Likewise, the outlook for India has been revised down by 0.8 percentage point, to 7.4 percent. For India, the revision reflects mainly less favourable external conditions and more rapid policy tightening.”
Despite the downgrade to the growth forecast, India will remain one of the fastest growing key economies in the world in FY23 and FY24, the IMF said.
The report mentioned China’s growth is estimated to slow down to 3.3 per cent in 2022 from 4.4 per cent estimated earlier.
In its report, IMF has cut its global growth projections for 2022 and 2023, dubbing the world’s economic outlook “gloomy and more uncertain.” The IMF expects the world economy to grow 3.2 per cent this year, before slowing further to a 2.9 per cent GDP rate in 2023.
The revisions mark a downgrade of 0.4 and 0.7 percentage points, respectively, from its April projections.