New Delhi: The International Monetary Fund on Tuesday revised India’s 2023 growth forecast upwards to 6.3 per cent – in line with its unchanged outlook for 2024 – to reflect “stronger-than-expected consumption” in the April-June quarter. The IMF, which in April called India “one of the bright spots in the global economy”, also said it expects its growth to be the highest among developing economies as global economic growth slows for various reasons, including Russia’s 20-month war on Ukraine and the Israel-Hamas conflict.
The IMF had earlier lowered India’s growth projections from 6.1 per cent to 5.9 per cent for the current fiscal and from 6.8 per cent to 6.3 per cent for the 2024/25 fiscal, or FY25.The Reserve Bank of India this week retained its 6.5 per cent growth forecast for this fiscal.
Meanwhile, the global financial body also downgraded projections for China – 2023 figures were revised down from 5.2 per cent to 5 per cent, and 2024 figures from 4.5 per cent to 4.2, citing concerns over the country’s real estate sector. IMF chief economist Pierre-Olivier Gourinchas told AFP the Chinese government needs “forceful action… to bring back confidence in the sector”.
Amongst advanced, or developed, economies, the United States has shown the strongest upward trend. The US economy is now expected to grow by 2.1 per cent this year, up 0.3 percentage points from the earlier forecast, and by 1.5 percent next year, up an impressive 0.5 points.
By contrast the Euro area is forecast to grow by just 0.7 per cent this year and 1.2 the next.The reasons include the impact of the war in Ukraine on energy prices and more resilient consumer spending, as well as better pandemic-related support to businesses.
Among European economies, Germany’s outlook has worsened since July; it is now the only G7, or Group of 7, country expected to enter a recession, either this year or next. The IMF also raised Japan’s outlook to 2 per cent for this year.
Overall, the IMF at its annual meeting in Morocco’s Marrakesh, said the global economy had shown “remarkable” resilience as it continues to recover from the Covid-19 pandemic and other global risks, including the cost-of-living crisis in several countries. However, in its World Economic Outlook, the IMF also noted “growth remains slow and uneven, with growing global divergences”.