IMF may lower India's GDP growth projection for 2022 to below 8.2%

The International Monetary Fund (IMF) may revise India’s GDP growth forecast for 2022 to below 8.2 per cent, an IMF official said.

“When we look at high-frequency indicators, it’s just that growth was lower in the last quarters than originally anticipated. Therefore, the growth for the whole year would be somewhat lower,” Luis E Breuer, senior resident representative of the IMF to India, Nepal and Bhutan explained.

The IMF had cut India’s gross domestic product (GDP) growth projection for 2022 to 8.2 per cent from 9 per cent in its World Economic Outlook report in April. The growth projection for 2023 is 6.9 per cent. Breuer said the next revision was going to be below 8.2 per cent and that it was a “work in progress”.

Speaking at a session on the current macroeconomic situation and business outlook, organised by the Merchants’ Chamber of Commerce & Industry in Kolkata, he said the risks of a global stagflationary moment had increased significantly in the last few weeks.

Global growth was projected to slow from an estimated 6.1 per cent in 2021 to 3.6 per cent in 2022 and 2023 due to the economic damage caused by the war in Ukraine. Breuer said the Ukraine war was an economic earthquake and its impact was global. He pointed to the increase in prices of commodities that led to rising inflation across the globe.

In India, he said that the drivers for growth were public investment and exports, as consumption was not growing very fast. Private investment too, he pointed out, was not growing very fast. But the Indian private sector had improved its debt situation, unlike many other countries, he said.

“We expect additional interest rate hikes in the US and in Europe, which will affect the whole world. As another consequence of the war, we see a slowdown in growth at the global level,” said Breuer.

Balance sheets of banks and corporate houses were stronger than they were five years ago, he said. “So the conditions are right for an increase in investment. But there are a lot of uncertainties and we still do not see a big jump in corporate investment.”