IMF lowers India’s economic growth forecast to 6.8 pc in 2022, says ‘global economy continues to face major challenges’

Washington: The International Monetary Fund (IMF) lowered its projection of India’s economic growth in 2022 to 6.8 percent on Tuesday, as it joins other global agencies that have revised forecasts. In July, the IMF had forecast India’s gross domestic product (GDP) growth of 7.4 percent in its fiscal year beginning in April 2022. Even that forecast was lower than the 8.2 percent expected in January this year. India had grown 8.7 percent in fiscal year 2021-2022 (April 2021 to March 2022).

In its annual World Economic Outlook report released Tuesday, the IMF said the outlook for India is 6.8 percent growth in 2022 – a decrease of 0.6 percentage points since the July forecast, reflecting a weaker than expected results in the second quarter and more subdued foreign demand.

Global growth is expected to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001, excluding the global financial crisis and the acute phase of the recession. COVID-19 pandemic .

Economic growth forecasts reflect significant slowdowns for the largest economies: a US GDP contraction in the first half of 2022, a euro area contraction in the second half of 2022 and prolonged outbreaks of COVID-19 and lockdowns in China with a growing crisis in the real estate sector, according to the IMF.

“The global economy continues to face major challenges, shaped by the ongoing effects of three powerful forces: the Russian invasion of Ukraine, a cost of living crisis caused by continued and mounting inflationary pressures, and the slowdown in China,” said Pierre. -Olivier Gourinchas, economic adviser and research director of the IMF, in his forward to the WEO, released at the annual meeting of the IMF and the World Bank.

More than a third of the global economy will contract by 2023, while the three largest economies – the United States, the European Union and China – will continue to stagnate. “Basically, the worst is yet to come and for many people 2023 will feel like a recession,” he wrote.

The growth forecast for China is 3.2 percent, down from 8.1 percent in 2021.

In China, the frequent lockdowns under the zero-COVID policy have taken a heavy toll on the economy, especially in the second quarter of 2022. In addition, the real estate sector, which represents about a fifth of economic activity in China, is weakening rapidly. .

“Given the size of China’s economy and its importance to global supply chains, this will weigh heavily on global trade and activity,” Gourinchas said.

In the United States, the tightening of monetary and financial conditions will slow growth to 1 percent next year. In China, the IMF has cut its growth forecast for next year to 4.4 percent amid a weakening real estate sector and ongoing lockdowns, he wrote in a blog post.

“Russia’s invasion of Ukraine continues to vigorously destabilize the global economy. In addition to the escalating and senseless destruction of lives and livelihoods, it has led to a severe energy crisis in Europe that greatly increases the cost of living and hampers economic activity,” he said. he.

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