The International Monetary Fund (IMF) on Tuesday raised India’s GDP projection marginally by 0.2 per cent to 6.3 per cent even as it slashed the global growth forecast to 3 per cent.

IMF in July had estimated India’s GDP forecast at 6.1 per cent for 2023-24. However, this is lower than the RBI’s latest estimate of 6.5 per cent for the current financial year.

IMF’s ‘World Economic Outlook’ revised China’s growth forecast downward by 0.2 percentage points for 2023 and 0.3 percentage points for 2024 to 5 per cent and 4.2 per cent, respectively.

The IMF also cut its estimates for euro zone growth to 0.7 per cent in 2023 and 1.2 per cent in 2024, from July forecasts of 0.9 per cent and 1.5 per cent, respectively.

With the property market crisis in that country, lower investment is the main contributor to the revision, it said.

“Growth in India is projected to remain strong, at 6.3 per cent in both 2023 and 2024, with an upward revision of 0.2 percentage point for 2023, reflecting stronger-than-expected consumption during April-June,” the ‘World Economic Outlook’ said.

Monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term, it noted.

The government has mandated the RBI to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side.

Observing that the food security concerns prompted recent export restrictions in the world’s largest rice exporter India, it said, risks to prices are tilted to the upside, stemming mostly from the ramifications of the end of the Black Sea Grain Initiative and uncertain effects of El Nino, possibly exacerbated by the proliferation of food export restrictions.

On the oil import, it said about 35 to 40 per cent of India’s crude oil imports came from Russia during April-June 2023, a stark rise from less than 5 per cent before the war in Ukraine.

“While India’s oil exports (mostly petroleum products) are small relative to its oil imports (mostly crude oil), India increased its oil exports to the European Union substantially,” it said.

World growth

The world economy has lost momentum from the impact of higher interest rates, the invasion of Ukraine and widening geopolitical rifts, and it now faces new uncertainty from the war between Israel and Hamas militants, the IMF warned Tuesday.

The IMF said it expects global economic growth to slow to 2.9 per cent in 2024 from an expected 3 per cent this year. The forecast for next year is down a notch from the 3 per cent it predicted back in July.

The deceleration comes at a time the world has yet to fully mend from a devastating but short-lived Covid-19 recession in 2020 and now could see fallout from the West Asian conflict — particularly to oil prices.

A series of previous shocks, including the pandemic and Russia’s war in Ukraine, has slashed worldwide economic output by about $3.7 trillion over the past three years compared with pre-Covid trends.

“The global economy is limping along, not sprinting,” IMF chief economist Pierre-Olivier Gourinchas said at a news conference during the organisation’s annual meeting in Marrakech, Morocco.

The IMF expectation of 3 per cent growth this year is down from 3.5 per cent in 2022 but unchanged from its July projections.