The International Monetary Fund (IMF) has slashed the growth forecast for India for the current financial year by 80 basis points to 8.2 per cent, cautioning that the ongoing Russia-Ukraine war will in the long run hurt consumption and also growth as inflation will rise.
The funding body has made the growth forecast in its "World Economic Report", which was released today.
Commenting on India's growth forecast in the report, the IMF said that higher oil prices are expected to weigh on private consumption and investment.
It also expected India's 2022-23 current account deficit to be at 3.1 per cent, compared with 1.5 per cent expected for 2021-22. There was also a cut in India's 2023-24 GDP growth forecast, to 6.9 per cent from 7.1 per cent estimated in global body's January report.
Russia's invasion of Ukraine has significantly hit recoveries in many countries. We have downgraded global growth for 2022 from 4.4% to 3.6%, and for 2023 from 3.8% to 3.6%. Read more in our latest WEO report https://t.co/WMdekgs2Ykpic.twitter.com/ZG9Fusjzg2— Gita Gopinath (@GitaGopinath) April 19, 2022
The Reserve Bank of India (RBI has said that India will grow at the rate of 7.2 percent in 2022-23, while the second advance estimate of the Ministry of Statistics and Programme Implementation had said that GDP growth would be 8.9 percent in 2021-22.
Apart from India, other significant downsizing forecasts of economic growth have been for Japan (0.9 percentage points) and Russia, where IMF has suggested that the country will contract 8.5 per cent in 2022 and also in 2023 by 2.3 per cent.
Commenting on Ukraine, IMF said that it is difficult to arrive at the exact extent of the damage that the war with Russia has caused to it.
At the same time, it has said that Ukraine's economy faces a "severe contraction" and is expected to shrink by 35 per cent in 2022.
"Global economic prospects have been severely set back, largely because of Russia's invasion of Ukraine," IMF Chief Economist Pierre-Olivier Gourinchas said.