IMF cuts India's GDP growth forecast to 9.5 per cent for fiscal year 2021-22

NEW DELHI:  The International Monetary Fund (IMF) has cut India’s economic growth forecast by three percentage points to 9.5% for the current fiscal from its earlier projection of 12.5%, citing “lack of access to vaccines” and chances of a third Covid wave. 

“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 the latest edition of its World Economic Outlook report, released on Tuesday.

For the next fiscal, however, the IMF has forecast an 8.5% growth for India, 160 basis points higher than its April forecast. The upward revision is mainly due to the low base of the previous year’s growth forecast.

“Steady recovery is not assured anywhere so long as segments of the population remain susceptible to the virus and its mutations,” the IMF said. It added “similar dynamics are at work in the ASEAN-5 group, consisting of Indonesia, Malaysia, the Philippines, Thailand and Vietnam, where recent infection waves are causing a drag on activity”. 

The US is expected to register a 7% growth this year, a sharp reversal from last year’s 3.5% drop and an upgrade from the 6.4% growth the IMF had forecast for 2021 back in April.  “Faster-than-expected vaccination rates and return to normalcy have led to upgrades, while lack of access to vaccines and renewed waves of Covid-19 cases in some countries, notably India, have led to downgrades,” said Gita Gopinath, chief economist, IMF. 

Global growth at 6%
IMF’s global growth forecast for 2021 calendar year remained unchanged at 6% as upgrades in the developed world were offset by downgrades in countries that experienced renewed Covid waves, notably India