IMF slashes India’s growth forecast after Ukraine war

As the impact of Russia’s invasion of Ukraine weighs heavily on prices and supply chains, India’s economy is estimated to grow by 8.2% in the current fiscal (2022-23), sharply slower than the International Monetary Fund’s (IMF’s) earlier forecast of 9%.
In its latest World Economic Outlook (WEO) report, the IMF forecast India’s economy to grow by 6.9% in 2023-24. The latest GDP growth forecast for India is still higher than the RBI’s estimate of 7.2% for 2022- 23. The central bank had earlier lowered its growth estimate from 7.8%, citing the impact of the war in Ukraine and breakdown of supply chains. The finance ministry had earlier estimated the economy to grow in the 8-8.5% range in 2022-23.
China is estimated to grow 4.4% in 2022-23 and 5.1% in 2023-24, a downgrade of 0.4 percentage point. The IMF cautioned that slowing growth in China’s economy has wider ramifications for Asia and for commodity exporters. The WEO said that the war in Ukraine will severely setback the global recovery.
According to the WEO, “As such, external positions are generally expected to deteriorate – particularly for net oil importers. Notable downgrades to the 2022 forecast include Japan (0.9 percentage point) and India (0.8), 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.” India, however, will retain its tag as the fastest growing major global economy but it faces severe headwinds.