IMF Projects Glowing Report For India
IMF has released its growth projections report for 2023 in which it talks about the growth rate estimation for various countries in the year gone, 2022, and the year to come. The report can be summarised in the words of IMF's CHief Economist Pierre Oliver Gourinchas, "The risks are accumulating. We're expecting about a third of the global economy to be in a technical recession."
Image source: IMF
As we can see, IMF has given a negative prediction for the economy, however, India will grow at 6.1 percent. A close analysis reveals that India is the only country with more than a 5 percent growth prediction. Europe's powerhouse, Germany, will see a negative growth rate, despite being the fourth-largest economy right now. The USA will grow at 1 percent and UK at a measly 0.3 percent. The report also says we can lose 4 trillion USD of economic output from now till 2026, which is the size of the German economy. In fact, they warn that the worst is yet to come.
The report also says that global inflation will peak in late 2022, increasing from 4.7 percent in 2021 to 8.8 percent and that it will “remain elevated for longer than previously expected", the report said. Global inflation will likely decrease to 6.5 percent in 2023 and 4.2 percent in 2024, according to the IMF forecast. The finding back Gourinchas' prediction of recession, that is, economic slowdown for two successive quarters.
What about India?
A close analysis reveals that India is the only country that is projected to grow at a rate of greater than 5 percent. In such a scenario, India's economy serves as an inspiration to the global economy. It is a moment of pride for every nationalist. However, it is not all smooth sailing. Inflation will dent the cost of living irrespective of where one is located. This rate, however, defers per location. India is no exception. For example, retail inflation is at a five-month high of 7.41 percent in September 2022. This is happening because food and energy prices are rising globally. Goldman Sachs has predicted that crude oil prices will rise to USD 110 a barrel, especially after OPEC+ announced supply cuts given its deal with Russia.
If this continues to be the running rate, it will spell doom for India's forex reserves. Given that the Rupee is at a record low of INR 82 per Dollar, it will further push down its value. Elara Global has predicted that the Rupee can touch INR 84-85 by March next year. One may assume a positive angle and say a depreciating report will boom exports. However, our finance minister, Nirmala Sitharaman made a public statement that this might or might not be the case. This is because exports need buyers, and given the global economic condition, this might not happen. Overall, we are fairing better than most countries, but tough times are not elusive. The long term will be difficult for every country in the coming future.
