In its World Economic Outlook report for the month of April 2022, the IMF said expectation of weaker domestic demand owing to higher oil prices will weigh on consumption.
“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,” the report said.
For financial year 2023-24, the multilateral agency cut India’s GDP projection by 20 basis points to 6.9 per cent.
IMF’s forecast is by far the highest among others.
In its monetary policy committee (MPC) meet earlier this month, the Reserve Bank of India (RBI) pegged GDP growth at 7.2 per cent for FY23. For the next financial year, the central bank had projected an expansion of 6.3 per cent.
Last week, the World Bank had cuts India’s GDP forecast to 8 per cent from 8.7 per cent for FY23, citing impacts of the Russia-Ukraine war.
In terms of global growth scenario, IMF sharply downgrade its 2022 forecast to 3.6 per cent due to the “seismic” impact of the war in Ukraine that is spreading worldwide.
“The economic effects of the war are spreading far and wide — like seismic waves that emanate from the epicenter of an earthquake,” IMF chief economist Pierre-Olivier Gourinchas said in the report.
The United States and China will also feel the effects of the war and the ongoing impact of the Covid-19 pandemic, with US growth expected to slow to 3.7 per cent, and China’s to 4.4 per cent.
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