In big pre-Budget boost, IMF says India to remain world's fastest growing major economy

As the economic survey is set to be released shortly by Union Finance Minister Nirmala Sitharaman, International Monetary Fund (IMF) has projected India to remain the fastest-growing major economy. 

IMF projects growth at 6.1% in 2023

On Tuesday, the International Monetary Fund (IMF) published its World Economic Outlook for the month of January and projected that India has retained its GDP growth for 2022-23 and 2023-24 at 6.8% and 6.1%, respectively. However, the growth is expected to lower from 6.8%, estimated for FY23 but will still retain its position of being the fastest-growing economy.

Global growth remains weak, but it may be at a turning point. We have slightly increased our 2022 and 2023 growth forecasts. Global growth will slow from 3.4% in 2022 to 2.9% in 2023 then rebound to 3.1% in 2024. https://t.co/TxZ9Co4S0j pic.twitter.com/elHTkvgUAA

— Gita Gopinath (@GitaGopinath)

According to the IMF, the economy will slow down in 2024 but will subsequently pick up the pace. "India's growth is set to decline from 6.8% in 2022-23 to 6.1% in 2023-24 before picking up to 6.8% in 2024-25, with resilient domestic demand despite external headwinds," the IMF said in an update to its World Economic Outlook report.

As per the projection, India will remain at a bright spot as along with China it will become a major engine of growth in 2023. India and China will contribute to half of the global growth this year, compared to just a tenth for the US and Euro Area combined. 

IMF also forecasted the growth of other countries:

• USA: 1.4%
• Germany: -0.1%
• France: 0.7%
• Italy: -0.6%
• Japan: 1.8%
• UK: 0.6%
• China: 5.2%
• India: 6.1%
• Russia: -0.3%
• Brazil: 1.2%
• Mexico: 1.7%
• KSA: 2.6% 
• Nigeria: 3.2%
• RSA: 1.2%

Global inflation to decline: IMF

According to the World Economic Outlook projections, global growth is projected to fall from an estimated 3.4% in 2022 to 2.9 % in 2023, then rise to 3.1% in 2024. Global inflation is expected to fall from 8.8% in 2022 to 6.6% in 2023 and 4.3% in 2024, still above pre-pandemic (2017–19) levels of about 3.5% in more than 80% of countries.

It is pertinent to mention that earlier this week, the World Bank also stated that India is expected to be the fastest-growing economy among the seven largest emerging-market and developing economies (EMDEs) even though its economic growth is projected to slow to 6.9% in FY23 and 6.6% in FY24 from 8.7% in 2021-22.