IMF lowers India’s economic growth forecast for 2022 to 6.8%; coming “recession”
India’s better-than-global growth projection; 2023 could look like a recession
In other bad news for the Indian economy, the International Monetary Fund (IMF) has cut its projection for the country’s economic growth in 2022 from 7.4% to 6.8%. Other global agencies have already done the same.
In July, the IMF forecast gross domestic product (GDP) growth of 7.4% for India for the financial year 2022-23. Then, too, he had cut the forecast of 8.2% forecast in January of this year.
India grew at a rate of 8.7% in the financial year 2021-22.
“Significant slowdowns for major economies”
In its annual World Economic Outlook (WEO) report released on Tuesday, the IMF said the outlook for India was 6.8% growth in 2022, down 0.6 percentage points. since the July forecast. This reflects weaker than expected production in the second quarter and more subdued external demand.
Also Read: Global Economic Outlook Darkens, Recession Imminent, IMF Chief Warns
Global growth is expected to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is the weakest growth profile since 2001 except for the 2007 global financial crisis -08 and the acute phase of the Covid-19 Pandemic in 2020-21.
Growth projections reflect significant slowdowns for the largest economies, the IMF said. These include a US GDP contraction in the first half of 2022, a Eurozone contraction in the second half of 2022, and prolonged Covid-19 outbreaks and lockdowns in China with a growing real estate crisis. .
“The global economy continues to face daunting challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost of living crisis caused by persistent and growing inflationary pressures and the slowdown in China,” said Pierre-Olivier Gourinchas, economic adviser and director of research at the IMF, in his foreword to the WEO published at the annual meeting of the IMF and the World Bank.
“The worst is yet to come”
More than a third of the global economy will contract in 2023, while the three largest economies – the United States, the European Union and China – will continue to stagnate. “In short, the worst is yet to come, and for many people, 2023 will look like a recession,” he wrote.
Also read: After Covid and Ukraine war, economy in eye of new storm: RBI Governor Das
The growth rate projection for China is 3.2%, compared to 8.1% in 2021. In this country, frequent lockdowns under its zero-Covid policy have weighed on the economy, particularly in the second quarter of 2022. In addition, the real estate sector, which accounts for about a fifth of its economic activity, is rapidly weakening.
“Given the size of the Chinese economy and its importance to global supply chains, this will weigh heavily on global trade and activity,” Gourinchas said.
In the United States, tighter monetary and financial conditions will slow growth to 1% next year. In China, the IMF lowered growth forecasts for next year to 4.4% due to a weakening real estate sector and continued lockdowns, he wrote in a blog post.
“Russia’s invasion of Ukraine continues to powerfully destabilize the global economy. Beyond the increasing and senseless destruction of lives and livelihoods, this has led to a severe energy crisis in Europe which is sharply increasing the cost of living and hampering economic activity,” he said.
(With contributions from the agency)