International Monetary Fund projects growth rate of 8% for India in 2022

The International Monetary Fund on Tuesday (April 19) projected a growth rate of 8.2 per cent for India in 2022.

Earlier, the Ministry of Statistics and Programme Implementation had predicted a growth rate of 8.9 per cent in FY22.

According to IMF's World Economic Outlook report, "Notable downgrades to the 2022 forecast include Japan (0.9 percentage point) and India (0.8 percentage point), reflecting in part weaker domestic demand, as higher oil prices are expected to weigh on private consumption and investment, and a drag from lower net exports."

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The IMF has said that it has slashed the eurozone forecast as well due to the war in Ukraine which has adversely impacted the manufacturing sector and energy prices.

They also have a "relatively large manufacturing sectors and greater dependence on energy imports from Russia."

“The food and fuel price increases will hurt lower-income households globally—including in the Americas and Asia,” IMF said.

"The main channel through which the war in Ukraine and sanctions on Russia affect the euro area economy is rising global energy prices and energy security."

"The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation," it added.

It comes after European Central Bank reduced its growth forecast for 2022 to 3.7 percent from 4.2 percent previously predicted.

A similar prediction was made by the Organisation for Economic Cooperation and Development which said that if the war's impact proves to be lasting, eurozone growth risked being cut by up to 1.4 percentage points. Meanwhile, inflation would increase by 2.5 percentage points over a year.

“In addition to the war, frequent and wider-ranging lockdowns in China—including in key manufacturing hubs—have also slowed activity there and could cause new bottlenecks in global supply chains. Higher, broader, and more persistent price pressures also led to a tightening of monetary policy in many countries. Overall risks to economic prospects have risen sharply and policy trade-offs have become ever more challenging,” the IMF said.

“The economic effects of the war are spreading far and wide—like seismic waves that emanate from the epicenter of an earthquake—mainly through commodity markets, trade, and financial linkages,” it said.

(With inputs from agencies)