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Due to the country’s stronger-than-expected growth momentum in the March quarter of FY23, the International Monetary Fund (IMF) on Tuesday increased its economic growth prediction for India by 20 basis points to 6.1 percent for FY24.
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In an April update to its “World Economic Outlook” (WEO), the International Monetary Fund (IMF) projected that India’s economic growth would increase to 6.1% in 2023, an increase of 0.2 percentage points compared to the April forecast. This increase is a result of the momentum generated by the stronger-than-anticipated development in the fourth quarter of 2022 due to increased domestic investment.
India’s growth in economy increased by 6.1% in the March quarter of FY23, outpacing analysts’ forecasts, as the manufacturing and construction sectors outperformed expectations.
In FY24, the majority of professional economists anticipate the Indian economy to expand between 6% and 6.5%. In contrast to the Organisation for Economic Co-operation and Development’s (OECD) upward revision of its forecast to 6% for FY24 last month, the RBI of India expects the economy to grow at a rate of 6.5% in the same fiscal year.
India’s economy is still expanding rapidly. After the release of the WEO update report, Danish Leigh, Division chief, Research department at the IMF, addressed the media and claimed that India was responsible for one-sixth of overall global growth this year.
Leigh predicted that India’s inflation rate would remain within the 2% – 6% tolerance zone. The International Monetary Fund projects inflation of 4.9% in fiscal year 24. The Reserve Bank of India’s decisive response and the gradual decline in food prices both played a role. For inflation to remain within the target range, as we anticipate it will, we believe it is necessary to maintain the current balance between inflation and output, he added.
The prohibition of non-basmati white rice export by India According to Pierre-Olivier Gourinchas, the chief economist at the International Monetary Fund (IMF), it is probable that in the present context, such restrictions are poised to intensify fluctuations in global food prices and maybe result in retaliatory actions. The speaker expressed their support for the elimination of export restrictions of this nature, citing their potential adverse effects on a worldwide scale.
The International Monetary Fund (IMF) has made upward revisions to its global growth prediction for 2023, increasing it by 20 basis points to reach 3 percent. This revision is accompanied by upward adjustments to growth forecasts for the United States (20 bps) and the United Kingdom (70 bps). Although it is anticipated that the British economy will not experience contraction, Germany stands as the sole major country poised for recession, with a projected contraction of 0.3% in 2023.
The resolution of the US debt ceiling dispute and the proactive measures taken by authorities to address instability in US and Swiss banking have effectively mitigated the immediate threats of financial sector disruption. The moderation of unfavourable risks has had an impact on the outlook. According to the research, the risks to global economy continue to be predominantly skewed towards the negative side.
However, the International Monetary Fund (IMF) issued a cautionary statement regarding the possibility of sustained high inflation or even an increase in inflation rates in the event of additional shocks. These shocks might arise from factors such as an escalation of the conflict in Ukraine or severe weather occurrences, which could prompt the implementation of more stringent monetary policies.
As markets adjust to central banks’ plans to tighten policy even further, financial sector turmoil could resurface. China’s rebound could slow down because of unsettled real estate problems, which would have bad effects on other countries. Stress from sovereign debt could spread to more countries. On the plus side, inflation might decrease more quickly than expected, making it less important to keep monetary policy tight, and demand within the nation could be stronger than expected again’, it said.
Before lowering them in 2024, the IMF thought that the US Federal Reserve would increase interest rates by more than was assumed in the April 2023 WEO, to a peak of about 5.6%.
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