Guwahati: The International Monetary Fund (IMF) predicted on Tuesday that India’s growth will slow to 6.8% in 2023 from 6.8% in 2022, but it would still be the largest economy with the fastest growth rates in 2023 and 2024.
The international organisation on Tuesday announced the January update of its World Economic Outlook, which projects that the rate of global growth will decline from an estimated 3.4% in 2022 to 2.9% in 2023 before rising to 3.1% in 2024.
The IMF in its note said: “Growth in India is set to decline from 6.8 per cent in 2022 to 6.1 per cent in 2023 before picking up to 6.8 per cent in 2024, with resilient domestic demand despite external headwinds.”
The analysis predicts that growth in emerging and developing Asia would increase to 5.3% and 5.2%, respectively, in 2023 and 2024 after a more severe than anticipated dip to 4.3% attributed to China’s economy in 2022.
“Our growth projections actually for India are unchanged from our October Outlook. We have 6.8 per cent growth for this current fiscal year, which runs until March, and then we’re expecting some slowdown to 6.1 per cent in fiscal year 2023. And that is largely driven by external factors,” Pierre-Olivier Gourinchas, Chief Economist and Director, Research Department, IMF, told reporters here.
The report predicts that growth in China would reach 5.2% in 2023 due to rapidly improving mobility, then decline to 4.5% in 2024 before stabilising at below 4% over the medium term due to diminishing business dynamism and poor structural reform efforts.
The Chief Economist and Director also said “Overall, I want to point out that emerging market economies on the whole and developing economies seem to be already on their way up. We have a slight increase in growth for the region from 3.9 per cent in 2022 to 4 per cent in 2023.”
The January update also said growth in the ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore, Thailand) is similarly projected to slow to 4.3 per cent in 2023 and then pick up to 4.7 per cent in 2024.
“Another relevant point here is that if we look at both China and India together, they account for about 50 per cent of world growth in 2023. So a very significant contribution,” Olivier Gourinchas said.
On inflation, IMF in its report said, “About 84 per cent of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022. Global inflation is set to fall from 8.8 per cent in 2022 (annual average) to 6.6 per cent in 2023 and 4.3 per cent in 2024 –above pre-pandemic (2017-19) levels of about 3.5 per cent.”
According to the IMF, a decline in the price of non-fuel and fuel-related commodities worldwide is a result of weakening global demand. It also takes into account the cooling impacts of tightening monetary policy on core inflation, which is predicted to fall from 6.9% in the fourth quarter of 2022 to 4.5% in the fourth quarter of 2023.
“Still, disinflation will take time: by 2024, projected annual average headline and core inflation will, respectively, still be above pre-pandemic levels in 82 per cent and 86 per cent of economies,” IMF said in its January update.