NEW DELHI: India is set to retain the label of the fastest growing economy in the world, with the International Monetary Fund (IMF) forecasting 8.5% growth for the year 2022.
In its latest World Economic Outlook report, released on Tuesday, the IMF said India’s economy is expected to grow 9.5 percent in 2021 and 8.5 percent next year.
This announcement is a positive sign for the economy which is recovering from the crisis created by the Covid-19 pandemic.
In FY21, the economy had grown 7.3 percent negative, the first time in nearly 40 years.
India also experienced its first technical recession last year with two consecutive quarters of negative growth following national lockdowns aimed at curbing the spread of the Covid-19 pandemic.
However, with the decline in cases, economic activities in the country are gradually picking up pace, with the economy registering a record 20.1% increase in gross domestic product (GDP) in the first quarter of fiscal year 22. Growth can be largely attributed to a low base effect and resumption of business activities.

“India is doing well in vaccinations”
The report praised India for its vaccination campaign against the Covid virus and therefore its aid in economic recovery, IMF chief economist Gita Gopinath said at a virtual conference after the report was released.
“We don’t have a change to our growth forecast for this year for India. I mean India came out of a very, very tough second wave and that led to a big drop in July, but we have no change (in its growth rate projections) from now, ”Gopinath said.
Gopinath said that the Indian economy is already facing a lot of challenges when it comes to the financial market, regarding the fact that the virus is not yet gone.
“Indians are doing well in terms of vaccination rates and it certainly helps,” Gopinath said in response to a question.
Lowered global growth projection
The global growth projection for 2021 has been revised down slightly to 5.9% and is unchanged for 2022 at 4.9%.
However, this modest overall revision masks severe deterioration for certain countries.
The United States is expected to grow 6% this year and 5.2% next year.
China, meanwhile, is expected to grow 8% in 2021 and 5.6% in 2022.
“The outlook for the group of low-income developing countries has darkened considerably due to worsening pandemic dynamics. The deterioration also reflects a more difficult short-term outlook for the group of advanced economies, in part due to supply disruptions, ”Gopinath said.
Partly offsetting these changes, the projections of some commodity exporters have been revised upwards due to rising commodity prices. Labor market recovery has lagged considerably behind the resumption of production in most countries, “said the Indian. -Added an American economist.
Noting that the dangerous divergence in economic prospects between countries remains a major concern, she said the aggregate output of the group of advanced economies is expected to return to its pre-pandemic trend path in 2022 and exceed it by 0.9% by 2024.
slowdown in US growth
The IMF cut its growth forecast for the United States for 2021 by a percentage point, to 6%, from 7% in July – a level that was considered the fastest pace since 1984.
US growth could decline further, the IMF said, as its forecast assumes a deeply divided US Congress will approve President Joe Biden’s proposed infrastructure and social spending worth $ 4 trillion over a decade. .
Lawmakers are now trying to reach consensus on a smaller package, and the IMF has said a significant reduction will reduce growth prospects for the United States and its trading partners.
(With contributions from agencies)