New Delhi, October 10, 2023 : The International Monetary Fund (IMF) has announced revisions to its growth forecasts for India and China during its annual meeting held in Marrakesh, Morocco. India’s growth forecast for 2023 has been revised upward to 6.3 percent, reflecting stronger-than-expected consumption in the April-June quarter. This revision aligns with the IMF’s unchanged outlook for 2024, reaffirming India’s status as one of the bright spots in the global economy.
The IMF had previously lowered India’s growth projections for the current fiscal year from 6.1 percent to 5.9 percent and for the 2024/25 fiscal year (FY25) from 6.8 percent to 6.3 percent. However, it now anticipates a more robust performance, largely due to resilient domestic consumption. The Reserve Bank of India has also retained its 6.5 percent growth forecast for this fiscal year, in line with the IMF’s revised estimate.
India’s projected growth surpasses that of other developing economies, as global economic growth faces various challenges, including Russia’s 20-month war in Ukraine and the Israel-Hamas conflict.
In contrast, the IMF has downgraded its growth projections for China. The 2023 figures have been revised down from 5.2 percent to 5 percent, and the 2024 figures from 4.5 percent to 4.2 percent. The downgrade is attributed to concerns over China’s real estate sector. Pierre-Olivier Gourinchas, IMF chief economist, emphasized the need for “forceful action” by the Chinese government to restore confidence in the sector.
Among advanced economies, the United States has demonstrated the strongest upward trend. The U.S. economy is now expected to grow by 2.1 percent in 2023, an increase of 0.3 percentage points from the previous forecast, and by 1.5 percent in 2024, up by an impressive 0.5 points.
However, the Euro area’s growth prospects remain more modest, with a forecast of just 0.7 percent growth in 2023 and 1.2 percent in 2024. Factors contributing to this outlook include the impact of the war in Ukraine on energy prices, resilient consumer spending, and improved pandemic-related support for businesses.
Germany, a member of the G7, stands out as it is now the only G7 country expected to potentially enter a recession in either 2023 or 2024.
Japan’s economic outlook has improved, with the IMF raising its estimate to 2 percent growth for 2023.
The IMF, during its annual meeting, emphasized the remarkable resilience of the global economy in its recovery from the Covid-19 pandemic and other global risks, including a cost-of-living crisis in several countries. However, it also highlighted that growth remains slow and uneven, leading to growing global divergences.
In summary, while the global economy continues to recover, the IMF cautions that it is not yet operating at full strength, with the impact of extreme weather-related events this year also contributing to economic fluctuations. The IMF’s global growth estimate for 2023 is 3 percent, with a slight downgrade to 2.9 percent for 2024, down 0.1 percent from the previous forecast in July.
