New Delhi, April 19 (Mayank Nigam) The International Monetary Fund (IMF) has cut India’s gross domestic product (GDP) forecast for FY23 to 8.2% from 9% earlier stating that higher oil prices are expected to weigh on private consumption and investment. Releasing the latest World Economic Outlook, the IMF said that global economic prospects have worsened significantly since its last forecast in January. “Notable downgrades to the 2022 forecast include Japan (0.9 percentage point) and India (0.8 percentage point), reflecting in part weaker domestic demand—as higher oil prices are expected to weigh on private consumption and investment—and a drag from lower net exports,” said IMF report released on Tuesday.
The multilateral institution has lowered global growth forecast—for the second time in six months—to 3.6% in 2022. “Beyond the devastating human costs of the war in Ukraine, it is a major stress to the global economy and serious setback to the recovery,” said IMF Managing Director Kristalina Georgieva. The IMF said that most emerging and developing countries are grappling with the economic fallout of the war and the long-term damage to their economies from the pandemic. “The divergence that opened up in 2021 with advanced economies is expected to persist,” it said. Commenting on India’s growth downgrade, ICRA Chief Economist Aditi Nayar said that the research and rating agency continues to peg the GDP growth in FY2023 at 7.2%, following the supply disruptions caused by the Russia-Ukraine conflict and lockdowns in China, as well as the impact of higher prices on disposable income and demand of households. “Faster capex (capital expenditure) by the central and state governments offers the key upside,” she said.