IMF cuts India’s FY22 forecast by 0.8 per cent, to drop more in FY23

India’s economic growth rate for FY 2022-23 has been slashed by 0.8 per cent, with the International Monetary Fund (IMF) on Tuesday revising its April prediction of ‘fairly robust’ 8.2 per cent due to ‘less favourable external conditions and more rapid policy tightening’.At the time of that prediction India was placed to become the fastest growing major economy in the world – nearly twice that of China’s 4.4 per cent.The IMF said a global economy still reeling from the Covid pandemic and Russia’s invasion of Ukraine faces an increasingly gloomy and uncertain outlook.The global economy is predicted to slow further to 3.2 per cent in 2022 – moderating to 2.9 per cent in 2023 – from 6.1 per cent last year. Both figures are significantly lower than those projected in the IMF’s April World Economic Outlook – by 0.4 and 0.7 per cent, respectively.READ | Bangladesh seeks $4.5 billion IMF loan as deficit widens: Report”This reflects stalling growth in the world’s three largest economies – the United States, China and the euro area – with important consequences for the global outlook.””The outlook for India has been revised down by 0.8 percentage point, to 7.4 per cent. For India, the revision reflects mainly less favourable external conditions and more rapid policy tightening,” the World Economic Outlook said.READ | US has ‘very narrow path’ to avoid recession: IMFDespite the 0.8 per cent cut, India’s 7.4 per cent GDP growth is the second highest after Saudi Arabia’s 7.6 per cent. But even the Indian economy – projected to grow at 8.7 per cent in 2021 – will slow down, the IMF warned, predicting a substantial drop of 1.3 per cent by 2023.The IMF’s forecast for India is, however, the most cheerful.The Reserve Bank of India expects the economy to grow at 7.2 per cent in 2022-23, while the Asian Development Bank on Thursday lowered its growth forecast from 7.5 per cent to 7.2 per cent, given higher-than-expected inflation and monetary tightening.

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