India's growth in 2023 is projected at 6.1%, which is a 0.2 percentage point upward revision compared with the April projection, reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment, the International Monetary Fund's World Economic Outlook revealed on Tuesday.
"Growth in India is projected at 6.1 per cent in 2023, a 0.2 percentage point upward revision compared with the April projection," it said in its latest update of the World Economic Outlook.
Global Growth Forecast: Moderation and Challenges
The global growth forecast indicates a decline from an estimated 3.5% in 2022 to 3% in both 2023 and 2024. Though the projection for 2023 is slightly higher than previously predicted, it remains weak when compared to historical standards.
Inflation and Economic Activity
Central bank policy rates' rise to combat inflation continues to impact economic activity worldwide. Global headline inflation is expected to decrease from 8.7% in 2022 to 6.8% in 2023 and further to 5.2% in 2024. However, underlying (core) inflation is projected to decline more gradually, with upward revisions to inflation forecasts in 2024.
Reduced Immediate Risks to Financial Sector Turmoil
Recent resolutions of the US debt ceiling standoff and proactive measures to contain turbulence in the US and Swiss banking sectors have diminished immediate risks of financial sector turmoil. These actions have moderated adverse risks to the economic outlook. Nonetheless, the overall balance of risks to global growth remains tilted towards the downside.
Potential Risks to Economic Outlook
The report highlights potential risks that could affect the economic outlook. High and potentially rising inflation may persist if further shocks occur, such as an escalation of the conflict in Ukraine or extreme weather-related events, leading to more restrictive monetary policies. Moreover, financial sector turbulence could resurface as markets adjust to further policy tightening by central banks. Additionally, China's recovery may slow, partly due to unresolved real estate issues, potentially causing negative cross-border spillovers. (With PTI inputs)
