The International Monetary Fund (IMF) on Tuesday cut India’s economic growth forecast for the current fiscal year to 5.9 percent from 6.1 percent earlier. However, India will remain the fastest growing economy in the world.

In its annual World Economic Outlook, the IMF also lowered the forecast for the fiscal year 2024-25 (April 2024 to March 2025) to 6.3 percent from the 6.8 percent it had forecast in January this year. .

The growth rate of 5.9% in fiscal year 2023-24 compares with an estimated 6.8% in the prior year.

The IMF growth forecast is lower than the Reserve Bank of India (RBI) projections. RBI sees GDP growth of 7 percent in 2022-23 and 6.4 percent in the current fiscal year that started on April 1.

The government has yet to release full-year GDP figures for 2022-23.

Despite a significant drop in growth rate projections from 6.8 percent in 2022 to 5.9 percent, India remains the world’s fastest-growing economy, Economic Outlook figures revealed. world.

China’s growth rate is projected to be 5.2% in 2023 and 4.5% in 2024 from its three percent growth rate in 2022.

On the surface, the global economy appears poised for a gradual recovery from the powerful blows of the pandemic and Russia’s unprovoked war against Ukraine. China is recovering strongly after the reopening of its economy. Supply chain disruptions are easing, while dislocations in energy and food markets caused by the war are receding, IMF Chief Economist Pierre-Olivier Gourinchas said.

“Simultaneously, the massive and synchronous tightening of monetary policy by most central banks should start to bear fruit, with inflation pulling back towards its targets.

“In our most recent forecast, global growth will bottom out at 2.8% this year before rising modestly to 3.0% in 2024. Global inflation will decline, albeit more slowly than initially anticipated, from 8.7% in 2022 at 7.0% this year. year and 4.9 percent in 2024,” he said.

According to him, the economic slowdown this year is concentrated in advanced economies, especially in the euro area and the United Kingdom, where growth is expected to fall to 0.8% and -0.3% this year before picking up. to 1.4% and 1%, respectively. .

By contrast, despite a 0.5 percentage point downward revision, many emerging market and developing economies are recovering, with year-end growth accelerating to 4.5% in 2023 from the 2, 8% in 2022, he wrote in a blog post. .

Gourinchas has argued that lawmakers need a steady hand and clear communication more than ever. With financial instability contained, monetary policy should continue to focus on reducing inflation, but be prepared to quickly adjust to financial developments.

“On the bright side, the banking turmoil will help slow aggregate activity as banks reduce lending. By itself, this should partially mitigate the need for further monetary tightening to achieve the same policy orientation.

“But any expectation that central banks would give up the fight against inflation prematurely would have the opposite effect: reduce yields, support activity beyond what is justified, and ultimately make the task of monetary authorities more difficult,” he said.

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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)