Amid global economic slowdown, India is in bright spot: IMF
What's the story
The International Monetary Fund (IMF) claimed on Tuesday that India's economic growth was improving despite the global economic slowdown. According to Krishna Srinivasan, Director of the IMF's Asia and Pacific Department, India is in a comparatively "bright spot" compared to other nations, despite the fact that growth is "slowing across many parts of the world even as inflation is rising."
Context
Why does this story matter?
This is a positive indication for India amid the global impact of the economic slowdown. Following the COVID-19 pandemic, the global economic crisis was precipitated by the Russia-Ukraine war and rising US interest rates, which escalated global fuel rates and other import prices. Countries with significant debt obligations, like India's neighboring Sri Lanka, are inevitably the worst hit.
Statement
What did IMF official say?
"We expect countries accounting for one-third of the global economy to go into a recession this year or the next. And inflation is rampant. So that is the overarching story," Srinivasan told PTI. "Almost every country is slowing. In that context, India is doing better and is in a relative bright spot compared to the other countries in the region," he said.
Details
Growth projection for India, other countries
According to NDTV, the IMF forecast a 6.8% growth rate in 2022 in its World Economic Outlook, compared to 8.7% in 2021 for India. The estimate for 2023 is further reduced to 6.1%. In 2023, more than one-third of the global economy is expected to decline. The world's three largest economies—the US, the European Union, and China—will "continue to stall," according to the report.
Details
IMF reduced global GDP prediction for 2023 to 2.7%
IMF Economic Counsellor Pierre-Olivier Gourinchas predicted the worst was yet to come in terms of the worldwide impact of the economic slump. "For many people, 2023 will feel like a recession," he said. IMF has reduced its global GDP forecast for 2023 to 2.7%, 20 basis points lower than its July projection. The projected global growth rate this year has remained unaltered at 3.2%.
Reason
Factors that lead to economic tightening
Experts said the present tightening of financial conditions is the result of a number of factors, including Asian economies and central banks tightening their policies to combat inflation. The second factor is the Russia-Ukraine situation, which has increased food and commodity prices and widened current account imbalances. The third factor is that China is slowing down in the area, according to the IMF.
India
RBI praised for lowering India's inflation
The Reserve Bank of India (RBI) has been lauded by the IMF for tightening the country's monetary policy in order to reduce inflation. "Since May, RBI sort of delivers 190 basis points rate hikes and we think further tightening is needed to bring inflation to its target," Garcia Pascual, Deputy Division Chief of the Monetary and Capital Markets Department of the IMF said.