The IMF predicted that the Indian economy would expand by 5.9% in 2023 and 6.3% in 2024, making it the fastest-growing economy in the world. This prediction was made in its most recent World Economic Outlook report, which was published in April.
IMF Managing Director Kristalina Georgieva On Inflation
IMF managing director Kristalina Georgieva said at the G20 summit on Tuesday that with economic activity weakening, particularly in the manufacturing sector, medium-term growth prospects globally might remain poor and increased inflation could need further tightening of monetary policy.
“The international economy has displayed some resiliency. Global growth—although anemic by historical standards—remains firmly in positive territory, supported by strong labor markets and robust demand for services,” Georgieva said at the third meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG). This is despite repeated shocks in recent years and the rapid rise in interest rates.
“Having said that, activity is waning, particularly in the industrial industry. Medium-term economic prospects continue to be bleak,” she noted in a statement.
The Indian economy was predicted by the IMF to expand by 5.9% in calendar year (CY) 2023 and 6.3% in CY 2024, making it the fastest-growing economy in the world, in its most recent World Economic Outlook report, published in April.
The IMF predicts that the world’s growth will decline from 3.4% in 2022 to 2.8% in 2023 before leveling out at 3% in 2024. A particularly strong economic deceleration is anticipated for advanced economies, going from 2.7% in CY 2022 to 1.3% in CY 2023.
“Inflation could remain higher for longer, requiring even more monetary policy tightening, and fragmentation could weigh even more on growth,” Georgieva warned.
However, despite the dramatic tightening of monetary policy, core inflation remained sticky, according to Georgieva in the statement.
High food and fertilizer costs are particularly concerning, she continued, especially for low-income homes where hunger and malnutrition are becoming much more pervasive.
Retail inflation in India, which had been declining consistently for the previous four months, increased sharply in June to a higher-than-anticipated 4.81%.
The repo rate was held at 6.50% by the Reserve Bank of India (RBI).
Georgieva recommended that G20 leaders take advantage of the chance to steer the world economy towards a more vigorous medium-term course in order to reduce the dangers. This would require both local and international policy action, according to Georgieva.
She emphasized how a wide range of turbulence is being caused by things like pandemics, climate change, and Russia’s invasion of Ukraine.
She continued, We must improve the global financial safety net in order to save the most defenseless nations and their citizens.
She continued, “while advanced and strong emerging market economies have a cushion of more than $10 trillion in international reserves.”
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