However, the IMF forecasted 8.5 per cent growth in 2022-23, up from 6.9 per cent in April.
The International Monetary Fund (IMF) lowered India’s growth of economic Projection for the financial year 2022 to 9.5 per cent on Tuesday, citing the start of a severe Covid-19 outbreak as a factor in the slowing rebound.
The GDP growth estimate for 2021-22 is lesser than the 12.5 per cent anticipated by the international body in April, just before the second wave hit India.
On the other hand, the IMF forecasted 8.5 per cent growth in 2022-23, up from 6.9 per cent in April.
“Growth prospects in India have been downgraded following the severe second COVID wave during March-May and expected slow recovery in confidence from that setback,” the IMF wrote in its current World Economic Outlook (WEO).
India’s financial system is slowly rebounding from a 7.3% decline on March 31, 2021, and a devastating second wave of COVID-19 that followed.
What is IMF’s forecast for the Global Economy?
The IMF upgraded its financial prognosis for the world’s developed nations this year, particularly the United States, predicting it anticipates the global economy to grow by 6% this year, up from a 3.2 per cent decline in the pandemic year of 2020.
The IMF’s prediction, which is unaltered from its April prediction, would result in the highest calendar-year global growth since records began in 1980.
The International Monetary Fund (IMF) forecasts developed countries to expand 5.6 per cent this year, up from 5.1 per cent in April, owing to the rapid rebound of consumers and companies.
However, it cut its 2021 projection for emerging economies and developing nations from 6.7 per cent to 6.3 per cent.
IMF Chief Economist Gita Gopinath thoughts on the Projection
In a post issued alongside the WEO, IMF Chief Economist Gita Gopinath noted, “The global economic recovery continues, but with a widening gap between advanced economies and many emerging markets and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed”.
Gopinath further added, “Faster-than expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of COVID-19 cases in some countries, notably India, have led to downgrades”.