GG News Bureau
Washington, 12th April. International Monetary Fund division chief Daniel Leigh on Tuesday expressed confidence in the Indian economy, calling it a “very strong economy.”
He stated that India is currently one of the bright spots in the global economy, with a high growth rate.
“Yes, we have a growth rate for India which is 6.8 in 2022. Let’s not forget this is one of the bright spots in the global economy right now. Such a high growth rate and it is moderating down to 5.9 with a -.2 revision compared to January, what’s happening here is also a set of historical revisions,” said Leigh.
The IMF cut its growth forecast for 2023-24 to 5.9 percent from 6.1 percent previously, but India remains the world’s fastest-growing economy, according to World Economic Outlook figures released on Tuesday.
“We realize that 2020-2021 has actually been a lot better than we thought and so actually there’s less room for catching up. And that pent-up demand from consumers that were informing our previous forecast is therefore going to be less because they have already had more catching up before. So that’s why there’s a downward revision this year. Then we go up to 6.3 next year again, a very strong economy which is necessary to allow India to continue to converge towards higher living standards and create those jobs that are necessary,” added Leigh.
According to the IMF, India’s inflation will fall to 4.9 percent this fiscal year and then to 4.4 percent the coming fiscal year.
The IMF’s growth forecast is lower than the Reserve Bank of India’s (RBI’s). The central bank forecasted 7% GDP growth in FY 2022-23 and 6.4% in the current fiscal year, which began on April 1.
Meanwhile, the international lender expressed concerns about inflation, debt, and the financial sector’s exposure to rising interest rates. It warned that if banks continue to cut lending, global output will fall by another 0.3 percentage point in 2023.
“Despite the fillips from lower food and energy prices and improved supply-chain functioning, risks are firm to the downside with the increased uncertainty from the recent financial sector turmoil,” the report said.
According to the IMF, growth will peak at 2.8% in 2023 before rising to 3% in 2024. Inflation is expected to remain high at 7% for the rest of the year before falling to 4.9% next year.
China’s growth rate is expected to be 5.2 percent in 2023 and 4.5 percent in 2024, up from three percent in 2022.
The United States is expected to grow by 1.6% in 2023, France by 0.7%, and Germany and the United Kingdom by -0.1% and -0.7%, respectively.
Despite the lingering COVID pandemic and tightening financing conditions as the Russia-Ukraine war continues, most countries will avoid recession in 2023.
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