Thursday, 11 Sep, 2025
By: Yash Gupte
The COVID-19 pandemic and the Russian invasion of Ukraine have both had a significant negative impact on the growth of the global economy. Image source: IANS
The forecast published by the international lender shows that India has emerged as one of the fastest growing economies in the world
Currently, the International Monetary Fund has cut down India’s GDP growth from 6.8% in 2022 to 6.1% in 2023. Pierre-Olivier Gourinchas, Chief Economist at the IMF said that the world’s three largest economies US, China and the countries in the Europe region will continue to stall and 2023 will be like a recession year for many people across the globe. The international financial institution also took a note of the escalating inflation in some of the most advanced economies of the world like USA and UK. It marked that, “Global inflation is proving to be broader and more persistent than anticipated. It is expected to peak at 9.5% in 2022 before slowing to 4.1% by 2024.”
The global lender has projected the global growth to slow from 6.0% in 2021 to 3.2% this year and 2.7% in 2023. It noted that this is the weakest growth since the beginning of the current century, except for the global financial crisis and the acute phase of the pandemic. A contraction in the USA’s GDP in the first half of the current year, European region contraction in the second half of 2022 and prolonged COVID-19 waves and lockdowns in China with a growing property sector crisis are the main reasons attributed to the slowdown in global growth.
Despite the pain brought on by monetary tightening and the rise of the U.S. dollar to a two-decade high, the two main causes of a recent stint of financial market volatility, the IMF advised central banks to continue their fight against inflation. The IMF stated that central bankers had to strike a fine balance to combat inflation without over-tightening, which might send the world economy into an "unnecessarily severe recession" and cause economic hardship for developing nations, whose currencies are falling steeply against the dollar. Coming over to the growth in emerging markets and developing economies across the globe, the IMF observed that growth in these economies will decline from 6.6% in 2021 to 3.7% in 2022 and 2023 while it forecasts the growth in advanced economies to drop from 5.2% in 2021 to 2.4% in 2022 and 1.1% in 2023. The chart below shows the IMF forecast of the GDP growth of six advanced economies and six emerging markets and economies.
Source: International Monetary Fund
Among the advanced economies of the world, a massive drop in the GDP growth projections can be witnessed in the case of the United Kingdom as the country’s economy grew at a rate of 7.4% in 2021 which is projected to decline to 3.6% for the current year and further to 0.3% in the next year. A negative growth projection has been made by the IMF in the case of Germany and Italy in the advanced economies category and in the case of Russia which falls under the developing economies. Russia’s growth has been projected to decline to -3.4% in 2022 and -2.3% in 2023. Among the advanced and developed economies of the world, USA and Canada are expected to perform better as compared to the other advanced economies. Apart from India and China, other developing economies and emerging markets are forecasted to witness a growth of just 2.5% in the current year and 1.1% in 2023.
The forecast published by the international lender shows that India has emerged as one of the fastest growing economies in the world and will continue to do so even if the GDP growth is expected to fall to 6.1% in 2023 amid negative economic trends like the depreciating rupee against US dollar and increase in the repo rate by the country’s central bank. IMF economist Daniel Leigh said that “the IMF expects inflation in India to return to the inflation tolerance band in the fiscal year 2023-24, and additional monetary tightening is going to ensure that that happens.”
