World Economic Outlook: Downward revision cycle for global economic outlook has begun

What is the News?

The International Monetary Fund(IMF) has released the World Economic Outlook Report.

What is the World Economic Outlook Report?

The report is published by the IMF twice a year: One each in April and October. It also provides updates to these two reports in January and July.

Aim: To provide analysis and forecasts of economic developments of member countries and highlight risks and uncertainty.

What are the key highlights from the report?

Global Growth: 

Global growth is projected to slow down from an estimated 6.1% in 2021 to 3.6% in 2022 and 2023. This is 0.8 and 0.2% points lower for 2022 and 2023 than in the January World Economic Outlook Update.

Reason: The downgrade is largely due to 1) the Russia-Ukraine war, 2) sanctions on Russia, 3) Sharper-than-anticipated deceleration in China, 4) renewed flare-up of the pandemic, 5) rising medium-term inflation expectations and 6) ongoing climate emergency.

Recommendations: Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change and end the pandemic are essential.

India: IMF has slashed the growth forecast for India for the current financial year by 80 basis points to 8.2%.

With import bills rising due to high commodity and fuel prices, the IMF estimates India’s current account deficit to widen to 3.1% in FY 2022-23 from 1.6% in FY 2021-22.

Additionally, deceleration in global growth would also lead to lower demand for Indian exports.

Source: The post is based on the article “World Economic Outlook: Downward revision cycle for global economic outlook has begun” published in Financial Express on 27th April 2022.