NewDelhi: The International Monetary Fund (IMF) has reduced India’s GDP estimate by 80 basis points to 8.2% for the fiscal year 2022-23. In January, the IMF had forecasted 9% growth rate for the same fiscal. The growth forecast has been reduced in view of the Russia-Ukraine war. The IMF believes that due to the Russia-Ukraine war crude oil prices are trading higher which had adversely affected India’s domestic consumption and private investment.
IMF’s GDP estimate is higher than RBI forecast
Although, the IMF may have lowered India’s growth forecast for the current financial year, but it is still much higher than local projections. For example, the Reserve Bank of India (RBI) has projected a GDP growth of 7.2% for FY23. According to the second advanced estimate of the statistics ministry, India’s GDP growth is likely to be 8.9% in FY22.
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For FY24 also, the gap between the GDP growth forecast of the IMF and RBI is huge. While the IMF thinks that the Indian economy will grow at 6.9% next year, the RBI has projected 6.3% growth. Earlier in January, the IMF had said that India’s economy would grow 7.1% in FY24.
The growth forecast of the world economy has also been reduced
Talking about the world economy, the economy may grow by 3.6% in 2023, which is 20 basis points less than the earlier estimate. IMF Chief Economist Pierre-Olivier Gourinches said, “The global economic prospects have been badly affected due to Russia’s invasion of Ukraine. The war has exacerbated supply chain problems. Like seismic waves, its effect will be far-reaching.
Russia and Ukraine most affected
The IMF has made a big cut in Russia’s growth forecast. In January the IMF gave Russia’s Goth forecast for 2022 at 2.8%. It has been reduced to -8.5. Russia’s economy may remain negative even in 2023. It is estimated to have 2.3% contraction. Regarding Ukraine, the IMF said that it is impossible to accurately estimate the damage to the economy from the war, but in 2022 the Ukrainian economy could shrink by 35%.
Meanwhile, even amid all the negative cues like the Russia-Ukraine war and Covid-induced slowdown; India is still growing faster than other economies of the world.
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