NEW DELHI: The International Monetary Fund (IMF) on Tuesday revised India’s growth forecast for 2023 upwards at 6.3%, reflecting stronger-than-expected consumption in the April-June quarter.
The IMF expects the country’s economic growth to be the highest among the developing economies, while global economic growth is slowing due to various reasons, including geopolitical conflicts such as the Russia-Ukraine war and the Israel-Hamas tension.
“Growth in India is projected to remain strong, at 6.3% in both 2023 and 2024, with an upward revision of 0.2 percentage point for 2023, reflecting a stronger-than-expected consumption during April-June,” IMF said in its report World Economic Outlook- Oct 2023.
Previously, the IMF had lowered India’s growth projections to 6.1% for the current fiscal year.
RBI has retained its 6.5% growth forecast for this fiscal year. The international fund also downgraded China’s growth projections, citing concerns over its realty sector.
Among advanced economies, the US has shown the strongest upward trend in growth, while the Euro area is forecasted to have slower growth.
The IMF’s global growth estimate for this year is 3%, and its 2024 assessment has been revised to 2.9%.
As per the IMF, the global economy faces several risks. Firstly, China’s real estate crisis could worsen, affecting global stability. Prompt restructuring of struggling property developers is necessary to restore confidence and address strains in local public finance.
Secondly, commodity prices may become more volatile due to geopolitical tensions and climate change disruptions.
Thirdly, inflation remains uncomfortably high, requiring action to bring it down.
Fourthly, fiscal buffers have eroded in many countries, leaving them vulnerable to crises and demanding better fiscal risk management.
Finally, despite policy tightening, financial conditions have eased, posing risks of sharp repricing, capital outflows, and increased borrowing costs for emerging markets.