IMF slashes India GDP growth forecast to 7.4% in FY23

The International Monetary Fund (IMF) on Tuesday further slashed India's economic growth measured by Gross Domestic Product (GDP) forecast by 80 basis points to 7.4 per cent for the financial year 2022-2023.

In April, the International Monetary Fund had lowered India's growth projection to 8.2 percent as compared to 9 percent estimated in January.

Moreover, the multilateral lender cut the country's growth forecast to 6.1 per cent for the financial year 2023-2024.

In its World Economic Outlook (April edition), IMF said though a global recession in 2022 is ruled out with growth estimate of 3.2 per cent, the balance of risks is squarely to the downside, driven by a wide range of factors that could adversely affect global economic performance.  

"Several shocks have hit a world economy already weakened by the pandemic: higher-than-expected inflation worldwide––especially in the United States and major European economies––triggering tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting COVID-19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine," it stated.

Furthermore, IMF also cut global growth forecasts, warning that downside risks from high inflation and the Ukraine war were materialising and could push the world economy to the brink of recession if left unchecked.

Global real GDP growth will slow to 3.2 per cent in 2022 from a forecast of 3.6 per cent issued in April, the IMF said. It added that world GDP actually contracted in the second quarter due to downturns in China and Russia.

Meanwhile, India's GDP grew at a slower pace at 4.1 per cent in the January-March quarter of the financial year 2021-2022, according to the data released by Ministry of Statistics & Programme Implementation (MoSPI) in May. The slow growth was mostly due to soaring prices and the subsequent hit to consumer spending and investments. Furthermore, for the full fiscal, the GDP was estimated to grow at 8.7 per cent in 2021-2022 as compared to a contraction of 6.6 per cent in 2020-21, the government data had added.