IMF cuts India’s GDP growth forecast to 9.5% for FY22

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The International Monetary Fund (IMF) on Tuesday cut its economic growth forecast for India to 9.5% for the fiscal year to March 31, 2022. This forecast for 2021-22 is lower than the 12.5% growth in GDP that IMF had projected in April before the second wave took a grip.

For 2022-23, IMF expects economic growth of 8.5%, larger than the 6.9% it had projected in April.

“Growth prospects in India have been downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback,” IMF said in its latest World Economic Outlook (WEO).

IMF joins a host of agencies that have cut India’s growth estimates for the current fiscal. Last month, S&P Global Ratings projected a 9.5% GDP growth in the current fiscal and 7.8% in 2022-23. While World Bank sees GDP growth at 8.3% from April 2021 to March 2022, the Asian Development Bank (ADB) last week downgraded India’s economic growth forecast to 10% from 11% estimated in April.

Moody’s has projected India clocking 9.3% growth in the current fiscal ending March 2022. For 2021 calendar year, Moody’s has cut the growth estimate sharply to 9.6%.

The GDP, which shrank from $2.87 trillion in 2019-20 to $2.66 trillion in the following year, is estimated to reach around $4 trillion in 2024-25.

Overall, the global economy is projected to grow 6% in 2021 and 4.9% in 2022. The 2021 global growth forecast is unchanged from the April 2021 WEO, but with offsetting revisions, the report said.

“The global economic recovery continues, but with a widening gap between advanced economies and many emerging markets and developing economies. Our latest global growth forecast of 6 percent for 2021 is unchanged from the previous outlook, but the composition has changed,” IMF’s Chief Economist Gita Gopinath said in a blog post released along with the WEO.