IMF cuts India's FY22 GDP forecast to

9.5% from 12.5%

• "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,"
the multilateral institution said in its latest
World Economic Outlook report.
• The International Monetary Fund, on July 27, cut
India's gross domestic product (GDP) growth forecast to
9.5 percent for fiscal year 2021-22, from the previous
forecast of 12.5 percent, citing the hit on economic
activity and demand due to the deadly 'second wave' of
the COVID-19 pandemic.

• "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," the multilateral institution said in
its latest World Economic Outlook report.
• The report said that steady recovery is not assured
anywhere so long as segments of the population
remain susceptible to the virus and its mutations.
"Recovery has been set back severely in countries
that experienced renewed waves— notably India," it
said.

• For fiscal year 2022-23, however, IMF expects

economic growth of 8.5 per cent, larger than the 6.9
per cent it had projected in April.

• IMF joins a host of global and domestic agencies

which have cut India's growth estimates for the
current fiscal. Last month, S&P Global Ratings
projected a 9.5 per cent GDP growth in the current
fiscal and 7.8 per cent in 2022-23.
• IMF and S&P’s projections for the current fiscal year
are in-line with that of the Reserve Bank of India’s
forecast of 9.5 percent, cut from 10.5 percent seen
earlier.

• The World Bank sees India’s GDP growth at 8.3 per

cent for FY22, while the Asian Development Bank
(ADB) last week downgraded India's economic growth
forecast to 10 per cent from 11 per cent

• In the IMF’s latest World Economic Outlook report, the

global economy is projected to grow 6 per cent in 2021
and 4.9 per cent in 2022. The 2021 global growth
forecast is unchanged from the last forecast in April
2021 but with offsetting revisions, said IMF’s Chief
Economist Gita Gopinath.
• "The global economic recovery continues, but with a
widening gap between advanced economies and many
emerging markets and developing economies. Our latest
global growth forecast of 6 percent for 2021 is
unchanged from the previous outlook, but the
composition has changed," Gopinath said in a media
briefing held alongside the release of the report.

• 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.

• "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