One of the bright spots in the global economy at the moment: IMF praises India’s growth

Washington:

The head of the International Monetary Fund’s department, Daniel Leigh, on Tuesday had confidence in the Indian economy, saying it was a “very strong economy”.

He said that India is currently one of the bright spots in the world economy with a high growth rate.

“Yes, we have a growth rate for India of 6.8 in 2022. Let’s not forget that this is one of the bright spots in the global economy at the moment. Such a high growth rate moderating to 5.9 with a revision of -0.2 compared to January, what’s happening here is also a series of historic revisions,” Leigh said.

The IMF on Tuesday lowered its growth forecast for 2023-24 to 5.9 percent from a previous 6.1 percent, but despite a sharp contraction, India remains the world’s fastest-growing economy, figures from the World Economic Outlook show .

“We know that 2020-2021 has actually gone a lot better than we thought and as such there is actually less room to catch up. And the consumer pent-up demand that shaped our previous forecast will therefore be less because they have already caught up more beforehand. That is why there is a downward revision this year. Then next year we move back up to 6.3, a very strong economy needed for India to continue moving towards higher living standards and create the necessary jobs,” Leigh added.

The IMF expects India’s inflation to slow to 4.9 percent this year and 4.4 percent next fiscal year.

IMF growth forecast is lower than Reserve Bank of India (RBI) forecast. The central bank forecast GDP growth of 7 percent for fiscal 2022-23 and 6.4 percent for the current fiscal year, which began April 1.

Meanwhile, the international lender raised concerns about inflation, debt and risks to the financial sector from rising interest rates. She warned that global output will fall another 0.3 percentage point in 2023 if banks continue to cut lending.

“Despite stimulus from lower food and energy prices and improved functioning of the supply chain, risks are firmly tilted to the downside with heightened uncertainty from the recent financial sector turmoil,” the report said.

The IMF forecasts that growth will bottom out at 2.8 percent in 2023 and increase to 3 percent in 2024. Inflation is expected to remain elevated at 7 percent for the remainder of the year before falling to 4.9 percent next year.

China’s growth rate is expected to be 5.2 percent in 2023 and 4.5 percent in 2024, up from a growth rate of 3 percent in 2022.
The US growth forecast for 2023 is 1.6 percent, France 0.7 percent, while Germany and the UK are at a dismal -0.1 percent and -0.7 percent, respectively.

However, most countries will avoid a recession in 2023, despite the ongoing COVID pandemic and tightening financing conditions as the war between Russia and Ukraine continues.

(Except for the headline, this story was not edited by NDTV staff and was published by a syndicated feed.)