On April 11, 2023, the International Monetary Fund (IMF) in its bi-annual World Economic Outlook (WEO) 2023 report with a title ‘A Rocky Recovery’ has downgraded India’s Gross Domestic Product (GDP) forecast for the financial year 2023-24 by 20 basis points (-0.2%) to 5.9% from 6.1% in January 2023 WEO Update.
- For FY25, India’s growth projections are cut by 50 basis points (-0.5%) to 6.3% from 6.8% in January 2023 WEO Update.
- However, India will continue to be the fastest-growing economy in the world.
Indian Scenario:
i.A key reason for lowering the growth forecast is global uncertainties. There is anticipation of lower consumption demand due to higher interest rates.
ii.In purchasing power parity terms, India’s growth in per capita output will decelerate to 4.9% in 2023 from 5.8% in 2022.
- It will be 5.4% in 2024.
iii.India’s retail inflation to ease at 4.9% in FY24 from 6.7% in FY23.
- It will be 4.4% in FY25.
iv.The current account deficit to come down to 2.2% of GDP in FY24 from an estimated 2.6% in FY23.
Global Scenario:
The global economy will grow by 2.8% in 2023 and 3% in 2024, down 10 basis points each from its January WEO 2023 forecasts.
i.Global inflation will fall from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024.
ii.In 2023 economic slowdown is concentrated in the advanced economies, especially the euro area and the United Kingdom (UK), where growth is expected to fall to 0.8% and -0.3% in 2023 before rebounding to 1.4% and 1% respectively.
iii.Many emerging markets and developing economies are picking up, with year-end to year-end growth accelerating to 4.5% in 2023, from 2.8% in 2022.
Forecasts by other Agencies for India:
i.The World Bank (WB) has revised its FY24 GDP forecast to 6.3%, as against its December projection of 6.6%.
ii.The Asian Development Bank (ADB) has cut its growth projection to 6.4% in FY24 as compared to its December Projection of 7.2%.
iii.RBI projected India’s growth at 6.5% in FY24.
Recent Related News:
i.India, which presently holds the G20 Presidency, has entrusted the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to jointly prepare a technical paper on cryptocurrency assets.This technical paper could be used to formulate an all-inclusive policy to govern crypto assets.
ii.On February 16, 2023, Morgan Stanley in its research report projected India’s gross domestic product (GDP) to grow at 6.2% in FY24 as drivers of domestic demand remain intact amid fears of an impending slowdown.
About International Monetary Fund (IMF):
Managing Director – Kristalina Georgieva
Headquarters– Washington, D.C, USA
Establishment– 1944
