IMF predicts Indian economy to grow at 6.1 percent in 2023

Washington: The International Monetary Fund has predicted that India's economy will grow at 6.1 percent in 2023, 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.

IMF said in the latest update of the World Economic Outlook that growth in emerging and developing Asia is on track to rise to 5.3 percent in 2023, then to 5.0 percent in 2024, showcasing a 0.1 percentage point downward revision for 2024.

It said the forecast for China remains unchanged at 5.2 percent for 2023 and 4.5 percent for 2024. However, consumption growth has evolved broadly in line with April 2023 World Economic Outlook projections. However, investment has underperformed due to the ongoing real estate downturn in China.

"Growth in India is projected at 6.1 percent in 2023, 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," IMF's World Economic Outlook Update said.

According to the prediction, growth in Japan is projected to witness an increase from 1.1 percent in 2022 to 1.4 percent in 2023, showcasing a modest upward revision then slow to 1.0 percent in 2024 as the effects of past stimuli dissipate.

The IMF said that global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. It further said that global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024.

"While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO), it remains weak by historical standards. The rise in central bank policy rates to fight inflation continues to weigh on economic activity," the update said.  

"Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward," it said.

The IMF said that the inflation could remain high and even rise if further shocks occur, including those from an intensification of the conflict in Ukraine and extreme weather-related events, resulting in more restrictive monetary policy. It said financial sector turbulence could resume as markets adjust to further policy tightening by central banks.

In the United States, growth is projected to slow from 2.1 percent in 2022 to 1.8 per cent in 2023, the World Economic Outlook Update said.