IMF keeps its India economic
growth projection for FY22 unchanged at 9.5%
International Monetary Fund (IMF) has retained its projection for India s
economic growth in the current financial year at 9.5 per cent, even as it has
moderately scaled down its forecast for the world economy during 2021 by 10
basis points to 5.9 per cent in view of worsening Covid dynamics and supply
its World Economic Outlook (WEO), the IMF has maintained India's gross domestic
product (GDP) estimates for next financial year at 8.5 per cent, unchanged from
its July projections.
WEO, titled Recovery During a Pandemic Health Concerns, Supply Disruptions,
and Price Pressures , has forecast world economic growth at 4.9 per cent for
2022, the same as earlier.
the IMF has cut its China GDP growth projections for 2021 and 2022 by 10 basis
points each to eight and 5.6 per cent, respectively.
this, India will again get the tag of the fastest-growing large economy in the
world, both in FY22 and FY23. In 2020, China s was the only major economy that
had registered growth. While it had grown 2.3 per cent last year, India's had
contracted by 7.3 per cent.
Fund has also projected India s consumer price index-based inflation rate to
stand at 5.6 per cent during the current financial year from 6.2 per cent last
year. For the next financial year, it has forecast a further decline to 4.9 per
two other bodies the monetary policy committee (MPC) of the Reserve Bank of
India and Standard and Poor's (S&P) had retained India's growth
projections for FY22 at 9.5 per cent.
its policy review last week, the MPC had also reduced its retail inflation
projection for FY22 to 5.3 per cent from its earlier prediction of 5.7 per
cent. Also last week, the World Bank (WB) had kept its projection for India s
economic growth in 2021-22 at 8.3 per cent.
Fitch Ratings had lowered its projection to 8.7 per cent from its earlier
forecast of 10 per cent in view of the impact of the second Covid-19 wave in
of China and India, emerging and developing Asia has been downgraded slightly,
as the pandemic has picked up, the IMF has said.
IMF has also said that the current account balance of India will slip into a
deficit of one per cent of GDP this financial year, as against a surplus of 0.9
per cent last year. The deficit will further widen to 1.4 per cent next
global economic growth, the IMF has said the downward revision for 2021
reflects a downgrade for advanced economies in part due to supply disruptions
and for low-income developing countries, largely due to worsening pandemic
has said that employment is generally expected to continue lagging the recovery
in output. The Fund has also said that headline inflation rates have increased
rapidly in the US and in some emerging-market and developing economies. In most
cases, rising inflation reflects pandemic-related supply-demand mismatches and
higher commodity prices when compared with their low base from a year ago.
said added that the balance of risks for growth is tilted to the downside,
while inflation risks are skewed to the upside.
Chief Economist Gita Gopinath said recent developments had made it abundantly
clear that the pandemic was not over anywhere until it was over everywhere.
"If Covid-19 were to have a prolonged impact into the medium term, it
could reduce global GDP by a cumulative $5.3 trillion over the next five years
relative to our current projections. It does not have to be this way," she
global community must step up efforts to ensure equitable vaccine access for
every country, overcome vaccine hesitancy where there was adequate supply, and
secure better economic prospects for all, Gopinath said.
IMF highlighted that grants from the Indian government to vaccine producers had
encouraged the development of Covid-19 vaccines.
Fund has cautioned that rapid spread of the Delta variant of coronavirus and
the threat of new variants have increased uncertainty about how quickly the
pandemic can be overcome. It has said policy choices have become more
difficult, confronting multidimensional challenges subdued employment growth,
rising inflation, food insecurity, the setback to human capital accumulation,
and climate change with limited room to manoeuvre.