The IMF on Tuesday cut India’s economic growth forecast by 0.5 percentage points to 9 per cent for the current fiscal year, with its Chief Economist Gita Gopinath saying that the slight downgrade is mainly due to the impact of the spread of the Omicron variant.
“If you look at the 2021-22 fiscal year, we have a slight downgrade of -0.5 percentage points and for the next fiscal year 2022-23 we have a slight upgrade of 0.5 percentage points. So, growth for the previous fiscal year is now nine per cent and for this year now is at nine per cent. We moved it up slightly," Gopinath told reporters during a news conference here.
In its latest update of World Economic Outlook on Tuesday, the Washington-based international financial institution, which had in October last year projected a 9.5 per cent GDP growth for India, put the forecast for the next fiscal FY23 (April 2022 to March 2023) at 7.1 per cent.
The Indian economy had contracted by 7.3 per cent in the 2020-21 fiscal year.
The IMF's forecast for the current financial year is less than 9.2 per cent that the government's Central Statistics Office has predicted and 9.5 per cent that the Reserve Bank of India has estimated. Its forecast is lower than the 9.5 per cent projection by S&P and 9.3 per cent by Moody's but more than the 8.3 per cent projection by the World Bank and 8.4 per cent by Fitch.
India’s prospects for 2023 are marked up on expected improvements to credit growth and, subsequently, investment and consumption, building on better-than-anticipated performance of the financial sector.
The IMF said that global growth is expected to moderate from 5.9 in 2021 to 4.4 per cent in 2022, half a percentage point lower for 2022 than in the October WEO, largely reflecting forecast markdowns in the two largest economies — the US and China.
A revised assumption produced a downward 1.2 percentage-point revision for the United States, it said. In China, pandemic-induced disruptions related to the zero-tolerance Covid-19 policy and protracted financial stress among property developers have induced a 0.8 percentage-point downgrade.
