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Journalism of Courage
Days after the Reserve Bank of India’s (RBI) raised its growth forecast, the International Monetary Fund (IMF) has cut its GDP growth forecast for India for the financial year 2023-24 by 20 basis points to 5.9 per cent. The fresh revision in the growth forecast by the Washington-based multilateral body in its latest bi-annual World Economic Outlook is broadly in line with what other multilateral agencies and economists have projected and is sharply lower than the RBI projection of 6.5 percent.
The RBI had, on April 6, hiked its growth forecast for the current year by 10 basis points in its first monetary policy review of FY24.The latest IMF projection makes it among the lowest growth forecasts for India in comparison with other multilateral development banks, with the World Bank projecting a 6.3 per cent growth rate and the manila-based Asian Development Bank forecasting 6.4 per cent GDP growth for FY24. Nomura has projected a growth rate of 5.3 per cent for the fiscal.
The IMF has projected India’s retail inflation to ease from 6.7 per cent in FY23 to 4.9 per cent in FY24 and current account deficit to come down to 2.2 per cent of GDP from 2.6 per cent in FY23.
Chief economist of IMF Pierre-Olivier Gourinchas said while the global economy’s gradual recovery is on track, the recent banking instability has highlighted the fragilities in the rebound story.
“We forecast in our latest World Economic Outlook that growth will bottom out at 2.8 percent this year before rising modestly to 3 percent next year—0.1 percentage points below our January projections”. Global inflation will fall, though more slowly than initially anticipated, from 8.7 percent last year to 7 percent this year and 4.9 percent in 2024,” he said in a blog.
“China’s reopened economy is rebounding strongly. Supply chain disruptions are unwinding, while dislocations to energy and food markets caused by the war are receding. Simultaneously, the massive and synchronised tightening of monetary policy by most central banks should start to bear fruit, with inflation moving back towards targets,” he said.
The IMF has projected that global growth will bottom out at 2.8 per cent in 2023 before rising modestly to 3 per cent next year and has said policymakers need a steady hand and clear communication to tide over this period of instability.
