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In January, the IMF in its World Economic Outlook (WEO) update had said that India remained a bright spot and with China would account for half of global growth this year, versus just a tenth for the US and euro area combined. It had retained India’s GDP growth projections at 6.1% for 2023-24 and 6.8% for 2024-25.
The WEO said that global growth will bottom out at 2.8% this year before rising modestly to 3% next year – 0.1 percentage points below its January projections. Global inflation will fall, though more slowly than initially anticipated, from 8.7% last year to 7% this year and 4.9% in 2024.
This is the lowest growth estimate among the multilateral agencies and the first below 6% projection. The World Bank has estimated GDP growth for the current fiscal year at 6.3% and the Asian Development Bank at 6.4%. The Reserve Bank of India (RBI) had in its latest monetary policy statement raised its GDP growth forecast marginally to 6.5% from 6.4% earlier.
China’s GDP growth has been projected at 5.2% for 2023 and 4.5% next year, slower than India’s expansion for both years. India’s growth has remained robust in the face of the global uncertainty and the impact of the war in Ukraine, but it is expected to face some headwinds due to the stubborn inflationary pressures.
“This year’s economic slowdown is concentrated in advanced economies, especially the euro area and the UK, where growth is expected to fall to 0.8% and -0.3% this year before rebounding to 1.4 and 1% respectively. By contrast, despite a 0.5-percentage-point downward revision, many emerging market and developing economies are picking up, with year-end to year-end growth accelerating to 4.5% in 2023 from 2.8% in 2022,” said IMF chief economist Pierre-Olivier Gourinchas.
Elaborating on risks, he said recent banking instability shows the situation remains fragile. “We are therefore entering a tricky phase,” he said.
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