New Delhi: India remains a bright spot and together with China, it will account for half of global growth this year, versus just a tenth for the US and euro area combined, the International Monetary Fund (IMF) said in its latest update to the biannual World Economic Outlook.
The US-based international financial institution has pegged India’s growth for 2023 at 6.1 per cent. Growth in India is set to decline from 6.8 per cent in 2022 to 6.1 per cent in 2023 before picking up to 6.8 per cent in 2024, with resilient domestic demand despite external headwinds. India and China will be the major engines of growth this year, IMF economic counsellor and director of research Pierre-Olivier Gourinchas noted in his blog.
The IMF has increased its global growth forecast for 2023 by 20 basis points to 2.9 per cent, holding that the balance of risks remained tilted to the downside, but adverse risks had moderated since its October 2022 report. While the global growth is projected to drop from last year’s estimated 3.4 per cent to 2.9 per cent this year, it will again rise to 3.1 per cent in 2024.
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In order to ensure that global growth is not hampered further, the IMF also listed out some policies that should be made a priority. These include securing global disinflation, ensuring financial stability, containing the re-emergence of Covid-19, supporting the vulnerable, restoring debt sustainability, strengthening multi-lateral cooperation and reinforcing supply side.
Global inflation to drop
According to the IMF report, global inflation is expected to drop from last year’s 8.8 per cent to 6.6 per cent this year. It will further decline to 4.3 per cent in 2024 but still be above pre-pandemic levels of around 3.5 per cent.
About 84 percent of countries are expected to have lower headline (consumer price index) inflation in 2023 than in 2022. The projected disinflation partly reflects declining international fuel and nonfuel commodity prices due to weaker global demand. It also reflects the cooling effects of monetary policy tightening on underlying (core) inflation