Inflation stays longer,IMF trims global growth, India will grow

International Monetary Fund (IMF) has estimates that India will grow at 9% in 2021-2022 – it estimated India’s growth prospects at 9.5% for the year in its October 2021 assessment; projects 9% growth for the Indian economy in 2022-23 – in its October assessment, this was pegged at 8.5%; and 7.1% in 2023-24. “India’s prospects for 2023 are marked up on expected improvements to credit growth – and subsequently investment and consumption – building on better-than-anticipated performance of the financial sector,” the report noted.IMF believes that elevated inflation will stay longer than assumed, and will wane off only in 2022 as “supply side imbalances wane and monetary policy in major economies responds”.

But the Fund’s prognosis for the global economy is grim Global economic growth will dip from 5.9% in 2021 to 4.4% in 2022, half a percentage point less than it estimated just three months ago, and 3.8% in 2023, IMF noted in its World Economic Outlook released on Tuesday. The dip in its projections for global growth are largely driven by the Fund’s assessment of economic prospects in the US and China. The report noted that removing the Build Back Better policy (a Joe Biden initiative that is stuck in Congress) from the baseline, earlier withdrawal of monetary accommodation, and continued supply shortages produced a downward revision of 1.2 percentage points for growth in US in 2022 – now pegged at 4%. “In China, pandemic-induced disruptions related to zero-tolerance Covid policy and protracted financial stress among property developers have induced a 0.8 percentage point downgrade.”