IMF Predicts That India's Economy Will Grow By 6.1% in 2023 as compared to 6.8% in 2022

The Indian economy is expected to see some setbacks in the upcoming fiscal year, according to the International Monetary Fund (IMF), which predicted that growth would slow to 6.1% in 2023 from 6.8% in 2022. However, according to the global financial institution's World Economic Outlook, the growth rate of the Indian economy would return to 6.8% in 2024.

The drop in India's growth rate in 2023, according to IMF Chief Economist and Research Department Director Pierre-Olivier Gourinchas, was primarily caused by external challenges.

According to a remark from Gourinchas provided to a news agency: "Our growth projections actually for India are unchanged from our October Outlook. We have 6.8 percent growth for this current fiscal year, which runs until March, and then we're expecting some slowdown to 6.1 percent in fiscal year 2023. And that is largely driven by external factors." 

According to the IMF World Outlook, the projected rate of global growth is 3.1% in 2024 after falling to 2.9% in 2023 from a projected 3.4% in 2022. Due to China's unstable economic situation, emerging and developing Asia's growth is expected to go up to 5.3% in 2023 and 5.2% in 2024 after slowing to 4.3% in 2022.

Gourinchas further emphasized that by 2023, China and India will account for about half of the global growth. He stated: "Another relevant point here is that if we look at both China and India together, they account for about 50 percent of world growth in 2023. So, a very significant contribution."

China's GDP growth in 2022 is expected to slow in the fourth quarter by 0.2%, which would be the first in 40 years. China's growth is predicted to increase to 5.2% in 2023 due to better mobility, but it is predicted to decline to 4.5% in 2024 before stabilizing at less than 4% due to falling business dynamism and weak structural reform efforts.

While India and China are projected to contribute around 50% to global economic growth, the US will experience a slowdown in growth to 1.4% in 2023 as a result of interest rate increases made by the Federal Reserve to combat increasing inflation. The energy crisis and the ECB's policy rate increases are anticipated to cause Europe's economy to bottom out at 0.7% this year.

The international financial organization also addressed global inflation rates in addition to growth rates. According to the IMF, India's inflation is predicted to decrease from 6.8% in the fiscal year that ended on March 31 to 5% in 2023 and then to 4% in 2024.

"Inflation in India as in other countries is expected to come down from 6.8 percent in 2022 to 5 percent in 2023 and then 4 percent coming towards the target of 2024."  said Daniel Leigh, Division Chief, Research Department, to the press. Leigh added that this was caused by the Reserve Bank of India (RBI) abandoning its accommodating stance in an effort to combat the nation's rising inflation rates.

According to the World Economic Outlook, worldwide inflation will decline from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, which is still higher than pre-pandemic levels of roughly 3.5%.