India remains world’s fastest-growing major economy even as IMF shows global downturn

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Even though the International Monetary Fund has cut India’s growth projection for this financial year to 6.8 per cent, it remains the fastest-growing major economy in a world facing a massive slowdown.

In rest of South Asia, Bangladesh had a higher growth projection than India at 7.2 per cent for this year, but with a gross domestic product of only $416 billion, it doesn’t rank with major economies, while India with a GDP of 3.17 trillion is the world’s fifth largest.

Bangladesh’s growth is projected to be 6 per cent next year.

Pakistan’s economy is projected to grow by 6 per cent this year and 4.4 per cent next year; Nepal by 4.2 per cent this year and 5 per cent next year; Bhutan by 4.9 per cent this year and 4.3 next, and the Maldives by 4.3 per cent this year and 4.4 per cent the next.

Sri Lanka’s economy was projected to shrink by 8.7 per cent and by 3 per cent next year.

The IMF’s World Economic Outlook report released in Washington on Tuesday cut India’s growth rate by 0.6 per cent from the projection of 7.4 per cent made in July, but it kept the slower growth projection for next year at 6.1 per cent, which would still be the highest for major economies.

The report said the downgrade reflects “a weaker-than-expected outturn in the second quarter and more subdued external demand”.

Coming off the Covid shock last year, India’s growth rate was 8.7 per cent, the report said.

The IMF growth projection for India this year was slightly higher than the World Bank’s 6.5 per cent released last week.

The IMF said the global economy would grow by only 3.2 per cent this year and slow down to 2.7 per cent next year buffeted by inflation, the fallout of the Ukraine War and the lingering effects of the Covid pandemic.

The report warned that global inflation was projected to rise to 8.8 per cent and said that “monetary policy could miscalculate the right stance to reduce inflation” and present “unusually large and to the downside”.

Among the other major economies, the US economy was projected to grow by 1.6 per cent this year, China by 3.2 per cent, Germany by 1.5 per cent, the Euro Zone by 3.1 per cent and Britain by 3.6 per cent.

Next year the report projected global growth to slow down to 2.7 per cent, and presenting a bleak prognosis it said advanced economies are projected to grow by only 1.1 per cent and the US by 1 per cent while Germany would contract by 0.3 per cent.

China’s economy is expected to grow by 4.4 per cent next year.

(By special arrangement with South Asia Monitor where this article appeared Oct. 12, 2022)