IMF Slashes India’s 2022 Growth Forecast to 7.4%

WASHINGTON, DC (IANS) – The International Monetary Fund on July 26 slashed its annual growth projection for India by 0.8 percentage points to 7.4 percent for 2022 and forecast “increasingly gloomy developments” for the global economy such as high inflation, downturn in China because of Covid and spillovers from the war in Ukraine.

The IMF cut its 2023 projection for India also by 0.8 percentage points to 6.1 percent. These revised forecasts are relative to those in the fund’s April world outlook report.

The 2022 cut for India “reflects mainly less favorable external conditions and more rapid policy tightening”, said the fund’s World Economic Outlook Update, titled “Gloomy and More Uncertain”.

The World Bank has also slashed its projections for India to 7.5 percent from 8 percent for 2022-23, blaming it on a surge in Covid-19 cases, related mobility restrictions, and the war in Ukraine.

The IMF forecast for India was called “rational” by an official who spoke on background. “Given the gloomy global outlook and inflation contagion, IMF’s growth forecast for India moderating it down by 0.8 percentage point is rational. Indian economy seems to be far more resilient now as others like US and China are taking a bigger hit with the forecast cut down to 1.4 and 1.1 percentage points respectively,” the official said.

“Further, IMF continues to project India’s growth rate in 2022 as the fastest growing major economy with 7.4 percent and the only other country around this rate is Saudi Arabia with 7.6 percent. Nearest to this ASEAN-5 at 5.3 percent while China is way down to 3.3 percent.”

The IMF projected a rather grim outlook for the world at large, saying it was facing “increasingly gloomy developments in 2022 as risks (that it had warned in April) began to materialize”.

“The outlook has darkened significantly since April,” IMF Chief Economist Pierre-Olivier Gourinchas said in a statement. “The world may soon be teetering on the edge of a global recession, only two years after the last one.”

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