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IMF cuts India’s FY23 growth forecast to 6.8%

Most other agencies, too, have been lowering their India forecast in recent weeks. The Reserve Bank of India also recently cut its projection modestly from 7.2 per cent to 7 per cent.

India had grown at 8.7 per cent in 2021-22 fiscal (April 2021 to March 2022). (File)

The International Monetary Fund (IMF) on Tuesday trimmed its FY23 growth forecast for India by 60 basis points from its July projection of 7.4 per cent to 6.8 per cent, its steepest cut for any major economy barring the US. IMF’s move follows the World Bank slashing its FY23 growth projection for India to 6.5 per cent last week, from 7.5 per cent predicted earlier.

Most other agencies, too, have been lowering their India forecast in recent weeks. The Reserve Bank of India also recently cut its projection modestly from 7.2 per cent to 7 per cent.

The IMF stated that the move reflects “a weaker-than-expected outturn” in the June quarter and “more subdued external demand”, indicating that exports will be hit. However, it retained its FY24 growth forecast at 6.1 per cent.

The IMF has kept unchanged its 2022 growth projection for the global economy at 3.2 per cent but scaled down the 2023 projection by 20 basis points from the July forecast to 2.7 per cent.

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In its latest World Economic Outlook, the multilateral body said: “As storm clouds gather, policymakers need to keep a steady hand. 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.”

“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” it added.

The revised forecasts for India follow weaker-than-expected 13.5 per cent growth in the June quarter and growing external headwinds, particularly the tightening of interest rates by key central banks. Nevertheless, India will continue to remain the world’s fastest-growing economy. FE

First published on: 11-10-2022 at 18:44 IST
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