India Still Fastest Growing Economy In Asia, Says IMF Even As It Lowers GDP Forecast

The International Monetary Fund (IMF) lowered India’s GDP growth forecast for the 2024 and 2025 financial years on Tuesday citing a slowing global economy.

What Happened? The IMF expects the GDP to grow 5.9% in 2023-24, 20 basis points lower than the estimate in January. It projects India to grow 6.3% in the 2025 fiscal year, 50 basis points lower than earlier estimates.

That said, speaking to PTI, Anne-Marie Gulde-Wolf, Deputy Director for Asia and Pacific Department, IMF said, “The Indian economy continues to perform well and remains the fastest growing Asian economy, and one of the fastest growing in the world.”

The IMF said that tentative signs of a soft landing for the world economy have receded due to stubbornly high inflation and recent global financial turmoil. According to the IMF, the global outlook is uncertain again due to the financial sector turmoil, high inflation, effects of the Russia-Ukraine war, and three years of Covid.

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The baseline forecast for global growth is thus expected to drop from 3.4% in 2022 to 2.8% in 2023 before stabilizing at 3% in 2024. Advanced economies will experience a particularly pronounced slowdown in growth, from 2.7% in 2022 to 1.3% in 2023.

In a plausible alternative scenario, the IMF believes that global growth will fall to about 2.5% in 2023, and advanced economy growth will fall below 1% due to further financial sector stress.

The global headline inflation in the baseline is expected to fall from 8.7% in 2022 to 7% in 2023 due to lower commodity prices, but underlying core inflation is likely to decrease more slowly.

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