The International Monetary Fund on Tuesday cut India’s growth forecast for FY23 to 8.2 per cent, as a falllout of Russia’s invasion of Ukraine. The downgrade in the growth projection is partly reflective of ongoing conflict that has resulted in high energy and food prices, slowing down the growth momentum.
In its annual World Economic Outlook report, the IMF said that India’s growth had been slashed by 0.8 percentage points as compared to the previous year forecast for the same period. “The downgrade largely reflects the war’s direct impacts on Russia and Ukraine and global spillovers,” it said.
In 2021, India registered a growth rate of 8.9 per cent. By 2023, India is estimated to grow at 6.9 per cent, the IMF said.
Notable downgrades to the 2022 forecast for Asia include Japan (0.9 percentage point) and India (0.8 percentage point), “reflecting in part weaker domestic demand — as higher oil prices are expected to weigh on private consumption and investment — and a drag from lower net exports,” the report said.
The global growth has been projected at 3.6 per cent in 2022, down from 6.1 per cent in 2021, the IMF said in its annual World Economic Outlook report released here.
It has also lowered India’s growth projection by 0.8 percentage points for 2022 from its previous forecast for the same period last year.
In 2021, India registered a growth rate of 8.9 per cent. By 2023, India is estimated to grow at 6.9 per cent, the IMF said.
Also Read: How Arya Collateral Warehousing Services is building a profitable business in a very tough Indian Agri Market
The downgrade in the 2023 growth projection for India is partly reflective of the war in Ukraine that has resulted in high energy and food prices, slowing down the growth momentum.
Notable downgrades to the 2022 forecast for Asia include Japan (0.9 percentage point) and India (0.8 percentage point), “reflecting in part weaker domestic demand — as higher oil prices are expected to weigh on private consumption and investment — and a drag from lower net exports,” the report said.
In its report, the IMF has projected global growth at 3.6 per cent in 2022 and 2023, 0.8 and 0.2 per cent lower than in the January forecast, respectively. “The downgrade largely reflects the war’s direct impacts on Russia and Ukraine and global spillovers,” it said.
China, which registered a growth rate of 8.1 per cent in 2021, has been projected to grow at 4.4 per cent in 2022 and by 5.1 per cent in 2023. The US has been estimated to grow at 3.7 per cent in 2022 against 5.7 per cent in 2021. Its projection for 2023 has been downgraded to 2.3 per cent, according to the IMF report.
Observing that both Russia and Ukraine are projected to experience large GDP contractions in 2022, it said the severe collapse in Ukraine is a direct result of the invasion, destruction of infrastructure, and exodus of its people.
In Russia, the sharp decline reflects the impact of the sanctions with a severing of trade ties, greatly impaired domestic financial intermediation, and loss of confidence. “The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicentre of an earthquake — mainly through commodity markets, trade, and financial linkages,” the report said.
(with PTI inputs)
