The IMF forecasted 6.1 percent growth for India in 2023, a 0.2 percentage point increase over the April forecast.
This reflects the “momentum” created by stronger-than-expected growth in the fourth quarter of 2022 as a result of increased domestic investment, according to the International Monetary Fund (IMF).
“Growth in India is projected at 6.1 percent in 2023, a 0.2 percentage point increase from the April projection,” the World Economic Outlook said in its most recent report.
Global growth is expected to dip from an estimated 3.5% in 2022 to 3% in both 2023 and 2024, according to the analysis.
While the projection for 2023 is slightly higher than forecasted in the World Economic Outlook (WEO) for April 2023, it remains weak by historical standards.
The increase in central bank policy rates to combat inflation is still weighing on economic growth. According to the report, global headline inflation is anticipated to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024.
Underlying (core) inflation is expected to fall more gradually, and inflation predictions for 2024 have been revised upward, according to the report.
According to the IMF, the recent resolution of the US debt ceiling impasse, as well as robust action by authorities earlier this year to contain turbulence in US and Swiss banking, lowered the immediate risks of financial sector volatility.
According to the report, this mitigated negative risks to the outlook.
However, the balance of global growth risks remains skewed to the downside.
According to the research, if other shocks occur, such as a deepening of the war in Ukraine or extreme weather occurrences, inflation might remain high or possibly climb, necessitating more restrictive monetary policy.
Financial sector instability may return as markets respond to additional central bank policy tightening. China’s recovery may be slowed, in part due to unresolved real estate issues, with negative cross-border spillovers , it said.
“Sovereign debt distress may spread to a broader range of economies.” On the plus side, inflation may decrease faster than projected, lowering the need for tight monetary policy, and domestic demand may prove more resilient once again,” according to the WEO research.
According to the IMF, central banks in countries with high and persistent core inflation should continue to clearly demonstrate their commitment to lowering inflation.
A tight policy is required, with real rates above neutral, until there are unambiguous indicators that underlying inflation is falling.
“With fiscal deficits and government debt above pre-pandemic levels, credible medium-term fiscal consolidation is needed in many cases to restore budgetary room for manoeuvre and ensure debt sustainability,” the IMF stated.
