Statsguru: IMF to World Bank, six charts explain growth forecast revisions

Reports released last week by the International Monetary Fund (IMF) revised global growth forecasts downwards in the wake of the Ukraine-Russia conflict. Earlier this month, the Reserve Bank of India (RBI), in its first monetary policy review of the fiscal year, had revised growth estimates for 2022-23 down by 60 basis points (bps), whereas the inflation forecast was revised to 5.7 per cent for this fiscal—closer to the 6 per cent ceiling. 

While the central bank had projected growth of 17.2 per cent in the first quarter of 2022-23 in February 2022, the latest statement witnessed a revision of 1 percentage point to 16.2 per cent. Inflation for the first quarter, on the other hand, was revised upward to 6.3 per cent against 4.9 per cent in February 2022 (chart 1). 

The professional forecasters are more optimistic about the economy than the RBI. Against a forecast of 7.7 per cent in the February survey, forecasters projected a marginal revision in growth to 7.5 per cent in their April survey (chart 2). 

Last month, the World Bank also revised its global growth forecast to 3.2 per cent for 2022 from 4.1 per cent projected earlier. India’s forecast was revised from 8.7 per cent to 8 per cent (chart 3). 

The IMF has projected a sharper revision than the World Bank for this year. Its global growth forecast is down 80 bps compared to its January estimate (chart 4).

In 2023, the IMF expects the global economy to maintain its momentum and grow at 3.6 per cent, but the Indian economy will lose steam and grow at 6.9 per cent (chart 5). While the IMF is still projecting an 8.2 per cent growth in 2021-22, the view among some of India’s rating agencies is more pessimistic. 

ICRA recently revised its growth projection from 8 per cent to 7.2 per cent; India Ratings is projecting the economy to grow at 7.1 per cent. Also Morgan Stanley’s estimate was a bit higher at 7.9 per cent (chart 6). The RBI will have to balance inflation expectations and growth in its next meeting.

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