THE INTERNATIONAL MONETARY FUND (IMF) has lowered its outlook for India’s economic growth to 9.5 per cent for the fiscal year 2021-22 from 12.5 per cent projected in April.
The onset of a severe second Covid-19 wave cut into recovery momentum of Indian economy, it said.
However, it raised the forecast for India’s economic growth in 2022-23 to 8.5 per cent from 6.9 per cent projected in April.
"Growth prospects in India have been downgraded following the severe second Covid wave during March-May and expected slow recovery in confidence from that setback," IMF said in its latest World Economic Outlook (WEO).
India is still recovering from a deep contraction of 7.3 per cent in the fiscal year ended March 31, 2021 and a subsequent severe second wave of Covid-19.
IMF is not the first one to cut the country’s growth estimates for the current financial year.
Last month, S&P Global Ratings projected a 9.5 per cent gross domestic product (GDP) growth in the current fiscal and 7.8 per cent in 2022-23.
The World Bank expects India’s economy to grow at 8.3 per cent in 2021-22, and the Asian Development Bank (ADB) last week downgraded its economic growth forecast to 10 per cent from 11 per cent estimated in April.
Besides, US-based rating agency Moody's has projected India growth at 9.3 per cent in the current fiscal, while for the calendar year 2021, it lowered the growth forecast sharply to 9.6 per cent.
IMF projected global economic growth in 2021 and 2022 at 6 per cent and 4.9 per cent, respectively.
The 2021 global growth forecast is unchanged from its April estimates, but with offsetting revisions, the report said.
"The global economic recovery continues, but with a widening gap between advanced economies and many emerging markets and developing economies,” it said.
IMF's chief economist Gita Gopinath said IMF estimates the pandemic has reduced per capita incomes in advanced economies by 2.8 per cent, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3 per cent a year for emerging market and developing economies (excluding China).
"These revisions reflect important extent differences in pandemic developments as the delta variant takes over. Close to 40 percent of the population in advanced economies has been fully vaccinated, compared with 11 percent in emerging market economies, and a tiny fraction in low-income developing countries," she said in a blog post released along with the WEO.
"Faster-than expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades," Gopinath added.
