Wednesday, 09 Oct, 2024
By: Yash Gupte
The forecast published by the international lender shows that India has emerged as one of the fastest growing economies in the world. Image Source: IANS
The most recent World Economic Outlook predicts that global growth would decrease from an estimated 3.4 percent in 2022 to a projected 2.9 percent in 2023 before increasing to a predicted 3.1 percent in 2024.
The International Monetary Fund (IMF) in its latest published report titled 'World Economic Outlook- Inflation Peaking amid Low Growth,’ January 2023 mentioned that it is expecting some slowdown in the Indian economy next fiscal year and projected the growth to 6.1 percent from 6.8 percent during the current fiscal ending March 31. The most recent World Economic Outlook predicts that global growth would decrease from an estimated 3.4 percent in 2022 to a projected 2.9 percent in 2023 before increasing to a predicted 3.1 percent in 2024. In 2023, the headline (consumer price index) inflation rate is predicted to be lower in 84 percent of countries than it was in 2022, according to the IMF's World Economic Outlook update, which was released on Tuesday. The global lender in its report also said that, ‘The rise in central bank rates to fight inflation and Russia’s war in Ukraine continue to weigh on economic activity. The rapid spread of COVID-19 in China dampened growth in 2022, but the recent reopening has paved the way for a faster-than-expected recovery.’
Pierre-Olivier Gourinchas, Chief Economist and Director, Research Department of the IMF said that, “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 fiscal year 2023. And that is largely driven by external factors.”
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 6.7 percent in 2021 to 3.9 percent in 2022 and 4.0 percent in 2023 while it forecasts the growth in advanced economies to drop from 5.4 percent in 2021 to 2.7 percent in 2022 and 1.2 percent 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 7.6 percent in 2021 which was projected to decline to 4.1 percent in 2022 and further to -0.6 percent in the next year. United Kingdom comes in the list of the countries which are expected to register a negative growth. In the case of advanced countries, United Kingdom is the only country that is expected to record a negative growth rate. Coming over to the emerging markets and developing countries, Russia was expected to register a negative growth of -2.2 percent in 2022. But according to IMF’s latest report, Russia is set to witness a growth rate of 0.3 percent. 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 to 3.5 percent till March 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 percent 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. The IMF has also forecasted that the India’s GDP will grow at a rate of 6.8 percent in 2024.
Coming over to global inflation, the World Economic Outlook stated that global inflation is set to fall from 8.8 per cent in 2022 to 6.6 per cent in 2023 and 4.3 per cent in 2024, which is above pre-pandemic levels of nearly 3.5 per cent. Daniel Leigh, Division Chief, Research Department of the IMF said that, talking about India, inflation is expected to come down from 6.8 percent in 2022 to 5 percent in 2023 and then further drop to 4 percent in 2024. Leigh added that this was caused by the Reserve Bank of India (RBI) abandoning its accommodating posture in an effort to combat the nation's rising inflation rates.
