Published on: April 29, 2022
WORLD ECONOMIC OUTLOOK
International Monetary Fund’s (IMF) released World Economic Outlook
WHAT DID THE REPORT SAY ON INDIA
- In 2023-24, India is estimated to grow at 6.9 %
- India’s current account deficit to widen to 3.1% in FY 2022-23
- India was “suffering like many other countries because of the Russia –Ukraine war and negative terms of trade shock “due to higher food and energy prices weighing down trade balances.
- Additionally, external demand was also softening as the rest of the world’s growth was impacted.
HOW IS THE WORLD PERFORMING
- The IMF has projected global growth at 3.6 % in 2022 and 2023
- A deceleration in global growth dampens India’s growth prospects especially because it would lead to lower demand for Indian exports.
- The downgrade largely reflects the war’s direct impacts on Russia and Ukraine and global spillovers.
- The recent lockdowns in key manufacturing and trading hubs such as Shenzhen and Shanghai (China) due to the resurgence of covid cases would likely compound supply disruptions elsewhere in the region and beyond.
WHAT ARE THE SUGGESTIONS GIVEN
- Monetary tightening by central banks to keep inflationary expectations in check amid global supply disruptions caused by the war in Ukraine.
- Monetary authorities should carefully monitor the pass-through of rising global prices to domestic inflation expectations to calibrate their responses.
- Backed targeted income support by governments to alleviate stress on household budgets in countries facing large price increases.