Context:
The International Monetary Fund has raised its forecast for global growth this year in the July update of its World Economic Outlook.
Globally:
- Global Growth Projection: The IMF’s World Economic Outlook raised the global growth forecast for the current year to 3%, up from the previous 2.8% forecast in April.
- Reasons: Due to reduced chances of a recession in the US, where inflation declined to 3% in June.
- US Economy Projection: The IMF projects the US economy to grow 1.8% in the calendar year 2023, an increase of 0.2 basis points from the April estimate.
- Global inflation expected to decline: IMF projects global inflation to decrease from 8.7% in 2022 to 6.8% in 2023.
- Core inflation to fall gradually: Core inflation, excluding volatile items, predicted to decrease gradually from 6.5% in 2022 to 4.7% in 2024.
- Downside Risks to Global Growth:
- Various factors, including geopolitical tensions (e.g., war in Ukraine) and extreme weather-related events, could lead to further shocks impacting economic growth.
- Tighter monetary policy may be implemented in response to inflationary pressures, affecting economic activity.
India’s Growth Projection:
- It has raised India’s GDP growth forecast for the current fiscal year to 6.1% from the previous prediction of 5.9% made in April 2023.
- Reasons: Due to stronger-than-expected growth in the fourth quarter of 2022 and robust domestic investment.
- The National Statistical Office reported an increase in investments by 8.9% during January-March, up from 8% during October-December.
Other Growth Projections for India:
| Organisation |
India’s GDP Growth Forecast (%) |
Reason/Comment |
| Asian Development Bank (ADB) |
6.4% |
Retained forecast due to recovery in consumption demand in both rural and urban areas, but cautioned about subdued exports due to the global slowdown |
| Fitch (Global Rating Agency) |
6.3% |
Raised forecast from 6% (predicted in March) to 6.3% due to improved economic conditions |
| Additional Information:
About International Monetary Fund (IMF):
- It is an international financial institution established in 1944 to promote global economic stability and cooperation.
- Goal: To ensure the stability of the international monetary system and facilitate international trade.
- Members: 190 member countries, each of which contributes funds to the IMF based on its economic size and needs.
- Decision-making power: The IMF’s decision-making power is determined by the size of a country’s financial contribution, with larger economies having more influence.
- Headquarters: Washington, D.C.
- Key publications:
- World Economic Outlook (WEO)
- Global Financial Stability Report (GFSR)
|
News Source: The Indian Express
27 Jul 2023
