The new estimates of IMF (July 2022) show that the growth rate of global output will decline by almost half from 6.1% in 2021 to 3.2% in 2022 and then further slow down to 2.9% in 2023. Many reasons are being given for this. It is pointed out that global output contracted in April-June 2022, mainly due to downturns in China and Russia. One factor that has forced a relook at growth prospects is the higher-than-expected inflation in developed economies, especially in USA and Europe which has led to monetary tightening in those economies. Slower than anticipated consumer spending in the US is also cited as a reason. However, while growth projections have been revised downwards, inflation has been projected upwards – Consumer Price Inflation has been projected to be 6.6% in advanced economies and 9.5% in emerging economies in 2022. The IMF Report speaks of other downside risks, such as the prolonged war in Europe. Though India’s growth rates for the next two years have been revised to 7.4% in 2022 and to 6.1% in 2023 it still manages to rank at the top in the IMF growth forecasts in 2022 and 2023. IMF seems to have only one policy prescription now which is monetary and fiscal tightening, whatever the impact of the same on vulnerable economic groups who would need social security. In that context, India’s balanced policy stance is indeed praiseworthy.
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