IMF calls India a bright spot, predicts global growth to fall to 2.9%
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Washington: The International Monetary Fund (IMF) has predicted some slowdown in the Indian economy in the next fiscal year and projected the growth to 6.1% from 6.8%. "Growth in India is set to decline from 6.8% in 2022 to 6.1% in 2023 before picking up to 6.8% in 2024, with resilient domestic demand despite external headwinds."
"Our growth projections actually for India are unchanged from our October Outlook. We have 6.8 percent growth for this current fiscal year, which runs until March, and then we're expecting some slowdown to 6.1 percent in the fiscal year 2023. And that is largely driven by external factors," said Pierre-Olivier Gourinchas, Chief Economist and Director of the Research Department of the IMF.
In the January update of its World Economic Outlook, global growth is projected to fall from an estimated 3.4% in 2022 to 2.9% in 2023, then rise to 3.1% in 2024. "Growth in emerging and developing Asia is expected to rise in 2023 and 2024 to 5.3% and 5.2%, respectively, after the deeper-than-expected slowdown in 2022 to 4.3% attributable to China's economy.
China's real GDP slowdown in the fourth quarter of 2022 implies a 0.2% point downgrade for 2022 growth to 3.0%. In over 40 years, this is the first time China's growth is below the global average. Growth in China is projected to rise 5.2% in 2023 and fall to 4.5% in 2024 before settling at below 4% over the medium term amid declining business dynamism and slow progress on structural reforms.
Gourinchas observed that emerging market economies on the whole and developing economies seem to be already on their way up. "We have a slight increase in growth for the region from 3.9% in 2022 to 4% in 2023. Another relevant point here is that if we look at both China and India together, they account for about 50 percent of world growth in 2023. So a very significant contribution. I want to say, we had a positive view of India in our October forecast. That positive view is largely unchanged."
The slowdown will be more pronounced in advanced economies with a decline from 2.7% in 2022 to 1.2% in 2023 and 1.4% in 2024 and 2025. "Nine out of 10 advanced economies will likely decelerate."
