IMF ECONOMIC PROJECTIONS
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Context
- The International Monetary Fund (IMF) recently released the World economic Outlook Report.
- The Report has cut its growth forecast for India for FY23 to 8.2 percent, warning that Russia's invasion of Ukraine would hurt consumption and hence, growth, by way of higher prices.
What Is the World Economic Outlook (WEO)?
- The World Economic Outlook (WEO) is a comprehensive report published twice a year by the International Monetary Fund (IMF).
- It includes the IMF's estimates and forecasts for global output growth and inflation.
- It also includes estimates of real gross domestic product (GDP) growth, consumer prices, current account balances and unemployment in the fund's 190 member countries, grouped by region and development status.
- The WEO includes several chapters on selected pressing economic issues.
- The data is drawn from IMF representatives' consultations with member countries, and is included in the WEO database.
April 2022 Report
- The World Economic Outlook published in April 2022, is titled as "War Sets Back the Global Recovery,".
- The Report lowered the IMF's global growth forecasts for 2022 and 2023 from an estimated 6.1% gain in 2021 amid a downturn caused by the COVID-19 pandemic.
- The IMF lowered its annual global growth forecast to 3.6% for 2022 as well as 2023, from 4.4% and 3.8% respectively. This is due to Russia's invasion of Ukraine and the related rise in energy and commodity prices.
- Countries in the Asian region, including India, faces difficult policy trade-offs in the wake of the Russia-Ukraine conflict.
- This is because the governments face the unenviable task of managing runaway inflation without upsetting growth dynamics.
Suggestions
- Policymakers should, protect the most vulnerable from rising fuel and food costs while enacting economic reforms to boost long-term growth.
- A surge in global oil prices caused by the Ukraine crisis will be a drag on India’s growth and increase current account deficit while driving up inflation. Thus it suggested for monetary tightening to curb price expectations.
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