Indian GDP Estimates Unchanged At 9.5%, But Global Recovery Slowing: IMF
In its WEO, the IMF said that a prolonged pandemic due to a paucity of vaccines could cost $5.3 trillion over 5 years
The International Monetary Fund has kept India's growth estimates for the ongoing financial year (FY22) - which runs from April to March - unchanged at 9.5%, relative to the numbers that it had released in July. Similarly, it kept India's growth estimates for FY23 unchanged at 8.5%. However, on a calendar year basis, the estimates have been revised downwards marginally from 8.8% in July to 8.3% now, and upward in 2022 from 8.3% in the July report to 9.6% now.
These numbers comes as part of its latest revision to its World Economic Outlook (WEO) report, which it released earlier today.
In the July edition of the report, the IMF had strongly downgraded India's growth estimates for FY22, from 12.5% to the current 9.5%.
"There are many challenges that the Indian economy does face with regard to the financial market, with regard to the fact that the virus has not gone yet. India is doing well in terms of vaccination rates that is certainly helpful", said the IMF's Chief Economist Gita Gopinath as a response to a question on India in her press briefing on the report.
The Reserve Bank of India's governor, Shaktikanta Das on October 9 too kept their growth forecast unchanged at 9.5%.
The IMF also estimates that consumer prices would rise 5.6% in India during the financial year, close to the RBI's 5.3% Das outlined last week. The RBI is supposed to maintain inflation at 4% with a tolerance band of 2% (that is 4%±2 percentage points).
The report, titled 'Recovery During a Pandemic: Health Concerns, Supply Disruptions and Price Pressures' themes the report around a slowing world recovery from the COVID-19 pandemic. To this end, it has marginally cut the world growth estimates from 6% in July to 5.9% now.
"However, this modest headline revision masks large downgrades for some countries. The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions", said Gopinath in her blog on the report. However, rising commodity price - driven exports slightly offsets this downside, she wrote.
Further the IMF has warned of losses to the tune of $5.3 trillion for the world economy over the course of 5 years should the pandemic drag on due to a shortage of vaccines. The "great vaccine divide" also persists, it said, where 60% of the population of advanced economies are fully vaccinated, but 96% those in low-income countries remain unvaccinated.
In other major economies, while China's forecasts for this year and next have been revised downward by 0.1 percentage point, the United State saw its 2021 forecast being downgraded from 7% in July to 6% now, though its estimates for 2022 have increased from 4.9% in July to 5.2% now.
The estimates of economies such as the United Kingdom and Japan have also been revised downward, but marginally, with a concurrent marginal bump given to its forecasts in 2022.
The IMF's October WEO report can be read here.