IMF cuts India's growth forecast to 6.8% in FY 23

New Delhi, October 11

The International Monetary Fund (IMF) on Tuesday cut India’s economic growth forecast to 6.8% in 2022 in line with its pessimistic projection for global growth.

The IMF has cited several headwinds for the current year and for 2023, including Russia’s war against Ukraine, chronic inflation pressures, high interest rates and the backwash of the Covid pandemic.

Official sources here saw a silver lining, pointing out that nevertheless India will register the highest growth rate among major economies.

The IMF said outlook for lower GDP growth in India is due to a weaker-than-expected outturn in the second quarter and more subdued external demand.

Global growth is expected to ease from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is the weakest growth profile since 2001, except for the global financial crisis and the acute phase of the Covid pandemic.

Much of it is because of weak performance from advanced economies as well after they entered the Ukraine conflict. These include a US GDP contraction in the first half of 2022, a euro area contraction in the second half of 2022, and prolonged Covid lockdowns in China.

“The global economy continues to face steep challenges, shaped by the lingering effects of three powerful forces: the Russian invasion of Ukraine, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China,” said senior IMF official Pierre-Olivier Gourinchas.

Global growth projected at 3.2%

• In July, the IMF had projected a GDP growth of 7.4% for the current fiscal, lower than 8.2% forecast in January this year
• The IMF said outlook for lower GDP growth in India is due to a weaker-than-expected outturn in the second quarter and subdued external demand
• Global growth is expected to ease from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023. This is the weakest growth profile since 2001, except for the global financial crisis and the acute phase of the Covid pandemic