Global Economic Prospects

Highlight Of Global Economic Prospects Report

• Growth Rate: Global economy is projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024.
  • It would be the third-weakest annual expansion in three decades, behind only the deep recessions that resulted from the 2008 global financial crisis and the coronavirus pandemic in 2020.
  • IMF had previously said that global growth is forecast to slow from 6% in 2021 to 3.2% in 2022 and 2.7% in 2023.
  • Unexpectedly rapid and synchronous global monetary policy tightening contributed to a significant worsening of global financial conditions, which is exerting a substantial drag on activity.

• Recession Expectation: Global economy will come “perilously close” to a recession this year, led by weaker growth in all the world’s top economies – the United States, Europe and China.
  • Factor Pushing Recession: New development such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession.
  • Slowdown in the global economy and rising uncertainty will weigh on export and investment growth.
• Challenges for emerging market and developing economies: They might struggle with heavy debt burdens, weak currencies and income growth, and slowing business investment.
  • Report noted that rising interest rates in developed economies like the United States and Europe will attract investment capital from poorer countries, thereby depriving them of crucial domestic investment.
• Impact on Human Development: Weakness in growth and business investment will compound the already devastating reversals in education, health, poverty and infrastructure and the increasing demands from climate change.
• High Commodity Prices: War-induced energy price shock could prove enduring, with oil prices expected to remain well above their pre-pandemic level throughout the next three years.
  • Steep rises in food prices brought on by war-related disruptions to grain, energy, and fertilizer markets have squeezed living standards

India Specific Highlight

• Indian economic growth is projected to slow from 8.7% in FY2021/22 to 6.9% in FY2022/23.
  • RBI’s projection of India’s GDP growth in FY23 is 6.8%.
• Further Slowdown: Indian economy is expected to grow at 6.6% in the fiscal year 2023-24.
• Silver Lining: India is expected to be the fastest-growing economy of the seven largest developing economies (EMDEs).
  • Resilient in the South Asia region: India accounts for three-fourths of the (South Asia) region’s output.
  • India’s growth expanded by 9.7 per cent on an annual basis in the first half of the fiscal year 2022-23, reflecting strong private consumption and fixed investment growth.
• India’s Efforts: The government has increased infrastructure spending and various business facilitation measures,
  • It will crowd in private investment and support the expansion of manufacturing capacity.

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