IMF ups India’s FY22 GDP growth forecast to 12.5 per cent

The International Monetary Fund (IMF) raised its FY22 growth forecast for India to 12.5% from 11.5% estimated earlier in January, even as a resurgent Covid spread threatens to undermine the country’s economic recovery.
The IMF forecast pitches India as the fastest-growing major economy and the only one expected to record a double-digit recovery from pandemic-hit 2020. China’s economy is seen growing 8.4% in 2021 and 5.6% in 2022.

"For the Emerging and Developing Asia regional group, projections for 2021 have been revised up by 0.6 percentage point, reflecting a stronger recovery than initially expected after lockdowns were eased in some large countries (for example, India)," IMF said in the latest edition of its flagship World Economic Outlook (WEO) report issued on Tuesday.

India’s gross domestic product (GDP) is seen growing 6.9% in FY23. India’s Covid-19 cases hit an all-time high last week, crossing 100,000 for the first time.

ET had reported Tuesday that economists do not expect a significant impact on the economy as of now, but if more states impose lockdowns or restrictions then the recovery may be hit.


The IMF expects world output to grow 6% in 2021 and 4.4% in 2022.

As per the forecast, advanced economies are projected to grow 5.1% in 2021, with the US and Spain expected to rebound the fastest at 6.4% each. India’s numbers are for the April 2021-March 2022 fiscal year while for other countries they are for calendar 2021. According to India’s statistics office, the economy contracted 8% in FY21 while the Economic Survey 2020-21 sees 11% growth in FY22.

Some Expect a Downward Revision
Despite higher-than-usual growth as the global economy recovers from the Covid shock, world output is still anticipated to be about 3% lower in 2024 than pre-pandemic projections suggested, the IMF said.

It raised concerns over medium-term prospects for the global economy, citing persistent damage to supply potential across both advanced and emerging market economies and slower labour force growth because of population aging in advanced economies and a few emerging market economies.

Rebalancing to a sustainable growth path in China is also expected to weigh on the growth outlook for the global economy in the medium term, the IMF said.

Independent economists expect a downward revision in the IMF’s forecast due to the second wave of the pandemic in the country. “Though the vaccination drive is gaining speed, there are downside risks to growth projections due to the unpredictable trajectory of the virus. It will depend on how deep and spread out the second wave is,” said Crisil chief economist DK Joshi.