The International Monetary Fund (IMF) projects that India’s economy will expand by 5.9% during the current fiscal year (April 2023 – March 2024), a decrease of 0.2 percentage points from the January forecast. For the next fiscal year, the IMF expects India’s economy to expand by 6.3%, a decrease of 0.5 percentage points from the previous estimate.
The IMF attributed the lower revision to better-than-expected historical performance.
In response to a query from The Hindu, IMF economist Daniel Leigh stated at a press briefing on Tuesday morning, “We realized that 2020-2021 has been significantly better than anticipated.” The growth figures were published as part of the World Economic Outlook (WEO): A Rugged Recovery report, which was introduced at the beginning of the World Bank and IMF Spring Meetings in Washington, D.C.
“Consequently, there is less space for catch-up,” Mr. Leigh stated. For the fiscal year that ended on March 31, the IMF projected a growth rate of 6.8% for India.
“And that pent-up demand from consumption, which informed our previous forecast, will be less because they’ve had more time to catch up in the past,” Mr. Leigh explained.
Mr. Leigh stated, “Once again, a very strong economy is required to enable India to continue to converge towards higher living standards and create the necessary employment.” The Hindu inquired about the employment and career outlook.
IMF forecasts that global output growth will decelerate to 2.8% in 2023 (calendar year) and then accelerate to 3% in 2024.
“The gradual recovery of the global economy from both the pandemic and Russia’s invasion of Ukraine remains on track,” IMF Chief Economist Pierre-Olivier Gourinchas said, adding that China’s reopened economy was rebounding strongly, supply chain disruptions were diminishing, and the negative effects of the war on food and energy prices were diminishing.
“At the same time, significant adverse financial stability risks have emerged,” he added.
The IMF report stated that “obstinately high inflation” and recent financial sector turmoil have diminished the likelihood of a “smooth landing” for the global economy following a period of high inflation and unsteady growth.
The growth rate of advanced economies is expected to be particularly sluggish. The U.S. was projected to grow 1.6% and 1.1% this and next calendar year, while the Euro Area was projected to grow 0.8% and 1.4% for both years. China is expected to develop by 5.2% this year and 4.5% the following year.
Although inflation has decreased as a result of falling food and energy prices and central bank rate hikes, fundamental price pressures remain and labor markets in a number of economies remain constrained, according to the IMF.
The IMF predicts 3.0% global growth in five years if recent financial sector concerns are managed.
“The anemic outlook reflects the strict policy stances required to bring down inflation, the repercussions from the recent deterioration in financial conditions, the ongoing conflict in Ukraine, and the growing geoeconomic fragmentation,” the World Economic Outlook (WEO) said.
The IMF recommended that central banks maintain their anti-inflation stance, while also adjusting and employing all of their policy instruments. The IMF stated that governments should “strive for an overall restrictive posture” while providing targeted assistance to those hardest hit by the cost of living crisis.