Global economic outlook a cause for concern: FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Thursday said India remained concerned about the global economic outlook and geopolitical environment despite this year’s projected growth rate of over 6 per cent for the country’s economy.

Sitharaman was speaking at the Development Committee Meeting at the Fund-Bank spring meeting in Washington DC.  

The International Monetary Fund (IMF) in its latest World Economic Outlook has warned that a sharp tightening of global financial conditions could have a dramatic impact on credit conditions and public finances, especially in emerging markets and developing economies.

The IMF has estimated that global growth will bottom out at 2.8 per cent in 2023 — a tad lower than earlier estimate — before rising modestly to 3 per cent next year.

For India, the IMF has projected the economy to grow at 5.9 per cent in FY24 while the Reserve Bank of India expects the economy to grow at 6.5 per cent during the fiscal year.

In its Regional Economic Outlook for the Asia Pacific region on Thursday, the IMF said India’s growth momentum would begin to slow as softening domestic demand offsets strong external services demand.

“In Asian EMDEs (emerging market and developing economies), we see a lot of strong dynamism in 2023. This will be driven primarily by the recovery in China and resilient growth in India. These two economies alone will account for about half of global growth,” it added.

Referring to the “Evolution of the World Bank Group – A Report to Governors”, released earlier this month, Sitharaman said the report provided a historic opportunity to think collectively on the evolution of the World Bank group.

Sitharaman posited that the World Bank should continue to work for its vision of “A World Free of Poverty” and seeks to achieve its mission of “ending extreme poverty” and ‘promoting shared prosperity’ in a manner that is inclusive, resilient, and sustainable.

During her intervention at the meeting, Sitharaman suggested that the global public goods should also be brought into the focus as the third goal.

Along with RBI Governor Shaktikanta Das, Sitharaman also co-chaired the first day of the second G20 finance minister and central bank governors (FMCBG) meeting on global economy and international financial architecture. 

Sitharaman strongly called for timely debt restructuring as the solution to the global debt crisis is closely intertwined with addressing the global poverty challenge. It adversely affects the most indebted countries as they also house the poorest people, she said.

The FMCBG discussed key challenges to the global economic outlook and explored possible areas of policy coordination on pressing global issues, besides exchanging views on accelerating progress on deliverables envisioned during India’s G20 presidency.

Sitharaman discussed progress on the agenda of strengthening MDBs, including hearing from MDBs on implementation of recommendations of capital adequacy framework review panel and sought the views of G20 members on the way forward of the expert group on strengthening MDBs set up under India’s G20 presidency.

Speaking about the Global Sovereign Debt Roundtable, Sitharaman emphasised India’s commitment as part of its G20 presidency to all global efforts to address growing debt vulnerabilities and welcomed partnerships from IMF and World Bank to advance this agenda.