IMF Raises India's Growth Forecast to 6.1% for FY23
The International Monetary Fund (IMF) has revised India's growth forecast, projecting a gross domestic product (GDP) growth of 6.1% for the fiscal year 2023-24. This is a positive 0.2 percentage point increase from the earlier April projection. The upward revision is attributed to the strong momentum gained from better-than-expected growth in the fourth quarter of 2022, mainly driven by robust domestic investment.
In the previous World Economic Outlook released in April, the IMF had lowered India's GDP projection to 5.9% for the current fiscal year. However, the recent upward revision reflects the economy's faster-than-anticipated growth of 7.2% in FY23. Despite the positive outlook, the IMF's revised projection for FY24 remains more conservative compared to other agencies. The Reserve Bank of India has projected a GDP growth of 6.5% for the current fiscal year, while the Asian Development Bank retains a forecast of 6.4%.
India continues to hold the title of the fastest-growing economy, with its neighboring country, China, estimated to grow at 5.2% in 2023 and 4.5% in 2024.
The IMF's Update to the World Economic Outlook also includes an upward revision for global growth output, now projected at 3% in 2023, up from the previous forecast of 2.8%. Advanced economies play a significant role in driving this decline in growth from 2022 to 2023, with weaker manufacturing and other unique factors offsetting stronger services activity.
Global growth is expected to stabilize, with a year-over-year basis showing improvement in the fourth quarter of 2022, although in some major economies, the bottoming-out is anticipated to occur in the second half of 2023. Central banks' actions to combat inflation by raising policy rates continue to impact economic activity.
Furthermore, global headline inflation is projected to decrease to 6.8% in 2023 and further decline to 5.2% in 2024, down from 8.7% in 2022. These forecasts indicate efforts to stabilize the global economy amidst ongoing uncertainties and challenges.
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