The International Monetary Fund (IMF) has cut India’s economic growth forecast to nine percent for the current fiscal year ending March 31, and has joined a host of agencies that have lowered their forecasts over concerns about the impact of the spread of a new variant of the coronavirus about business activities and mobility.
In its latest update to the World Economic Outlook on Tuesday, the Washington-based international financial institution, which had forecast GDP growth of 9.5 percent for India in October last year, has forecast for its next fiscal year 23 (April 2022). until March 2023). at 7.1 percent.
The Indian economy had contracted by 7.3 percent in fiscal year 2020-21.
The IMF’s forecast for the current fiscal year is less than 9.2 percent forecast by the government’s Central Bureau of Statistics and 9.5 percent estimated by the Reserve Bank of India. The forecast is lower than the 9.5 percent forecast by S&P and 9.3 percent by Moody’s, but ahead of the World Bank’s 8.3 percent forecast and Fitch’s 8.4 percent forecast.
According to the IMF, India’s 2023 outlook is based on projected improvements in credit growth and then investment and consumption, building on the better-than-expected performance of the financial sector.
The IMF said global growth is expected to moderate from 5.9 in 2021 to 4.4 percent in 2022, half a percentage point lower for 2022 than in October’s WEO, largely due to expected write-downs in the two largest economies. – the US and China.
A revised assumption that removed the “Build Back Better” fiscal policy package from the baseline, earlier withdrawals of monetary accommodation and ongoing supply shortages led to a 1.2 percentage point downward revision for the United States, it said.
In China, pandemic-induced disruptions related to the zero-tolerance COVID-19 policy and prolonged financial stress among property developers led to a write-down of 0.8 percentage points.
Global growth is expected to slow to 3.8 percent by 2023.
“While this is 0.2 percentage points higher than the previous forecast, the upgrade largely reflects a mechanical rebound after current barriers to growth dissipate in the second half of 2022. The forecast is dependent on adverse health outcomes seen in most countries will fall to low levels by the end of 2022, assuming global vaccination rates improve and therapies become more effective,” the report said.
In a blog post, IMF chief economist Gita Gopinath wrote that the ongoing global recovery faces multiple challenges as the pandemic enters its third year.
The rapid spread of the Omicron variant has led to renewed mobility restrictions and greater labor shortages in many countries, she said.
Supply disruptions are still weighing on activity and contributing to higher inflation, adding to the pressures of strong demand and high food and energy prices, Gopinath wrote.
(Except for the headline, this story has not been edited by DailyExpertNews staff and has been published from a syndicated feed.)