The InternationalMonetary Fund has cut the growth forecast for India in the current financial year by80 basis points to 7.4 per cent.
In its July Update of its World Economic Outlook, the IMF said it had also cut its growth forecast for India next year (fiscal year ended March 2024) by 80 basis points to 6.1per cent.
One basis point is one-hundredth of a percentage point.
The Fund also slashed its projection for global growth to 3.2 per cent in 2022, 0.4 percentage points lower than the number it put out in the April 2022 World Economic Outlook.
It also trimmed its forecast of global growth next year to2.9 per cent, a cut of 70 basis points from the one it made in April.
The IMF’s latest growth forecast is still slightly higher than the Reserve Bank of India’s projection of 7.2 percent in the current fiscal. “For India, the revision reflects mainly less favorable external conditions and more rapid policy tightening,” the IMF said.
“A tentative recovery in2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize. Global output contracted in the second quarter of this year, owing to downturns in China and Russia, while US consumer spending undershot expectations,” the IMF said in its latest World Economic Outlook released on Tuesday.
It said the pandemic-weakened global economy had been buffeted by several shocks this year: higher-than-expected inflation worldwide––especially in the United States andmajor European economies–– triggering tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting Covid- 19 outbreaks and lockdowns; and furthernegative spillovers from the war in Ukraine.
Baseline growth in the US has been revised down by 1.4percentage points to 2.3 percent in 2022, and by 1.3 percentage points to 1 per cent in2023. Growth in the Euro has been revised downward by 0.2 percentage points to 2.6per cent in 2022, and by 1.1 percentage points to 1.2 per cent in 2023.
The IMF slashed its baseline growth forecast for Chinaby 1.1 percentage points to 3.3per cent in 2022 and by 0.5 percentage points to 4.6 per cent in 2023.
