The IMF is revising India’s growth projection for 2022, which could be lower than its previous forecast of 8.2%, amid risks of global stagflation, a senior official said on Tuesday. international organisation.
In April, the International Monetary Fund lowered India’s growth projection to 8.2% from 9% estimated in January. By 2023, the country is expected to grow by 6.9%, he said.
“The IMF is currently revising India’s growth forecast for 2022, which could be lower than 8.2%. It’s a work in progress at the moment,” IMF Senior Resident Representative in India Luis Breuer said during an interactive session on “World Economic Outlook” hosted by the MCC here.
He said the country faces high inflation with low employment, which does not bode well for job opportunities.
Breuer also called for stabilizing debt at higher levels, which resulted from the impact on public finances of the Covid-19 pandemic, and the need to protect vulnerable sections of society.
India is considered an emerging economy, which is recovering at the moment, he said.
The IMF official said central banks in the United States and Europe had started raising interest rates to tackle rising inflation caused by soaring commodity prices and supply disruptions .
“The U.S. Federal Reserve is expected to raise interest rates going forward and the global economy is expected to plateau at 3.6%,” he said, adding that rising borrowing costs will impact growth rates.
“Real interest rates could rise and a rise in US rates will suck capital from the rest of the world due to high yields,” Breuer said.
Stagflation is defined as a situation of high inflation and stagnant growth.
He also said the pandemic was not over and the lockdown in Beijing had not yet been lifted, unlike Shanghai.
“China, being the factory of the world, the shutdown will disrupt global supply. There is a risk that China will face a slowdown, which will negatively impact India,” he said. declared.
A 1% decline in China’s GDP growth will reduce India’s by 0.6%, more than the combined decline of the UK and US together, Breuer said.