IMF further downgrades India’s FY22 growth forecast to 9.5%, Warns of widening fault lines in global recovery

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Biznextindia : The International Monetary Fund (IMF) has downgraded India’s FY22 growth forecast to 9.5 percent following the set back from the second wave of the COVID-19 pandemic.

The latest projection is 300 basis point or 3% lower than IMF’s April round of forecast.

“Growth prospects in India have been downgraded following the severe second COVID wave during March–May and expected slow recovery in confidence from that setback” IMF said in its ‘World economic outlook update’ report released on July 27.

The IMF report has said that the fault lines have widened in the global recovery. Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising COVID death tolls.

The IMF, however, has retained world growth outlook unchanged at 6 percent for 2021 and 4.9 percent in 2022.

“The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022. The 2021 global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia. By contrast, the forecast for advanced economies is revised up. These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group” read the IMF report.

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