IMF upgrades outlook for rich nations, slashes India forecast

Washington, July 27

The International Monetary Fund (IMF) on Tuesday maintained its 6% global growth forecast for 2021, upgrading its outlook for the US and other wealthy economies but cutting estimates for a number of developing countries struggling with surging Covid infections.

“Close to 40% of the population in advanced economies has been fully vaccinated, compared with 11% in emerging market economies, and a tiny fraction in low-income developing countries,” IMF’s chief economist Gita Gopinath said.

The IMF significantly raised its forecasts for the US, which it now expects to grow at 7% in 2021 and 4.9% in 2022 — up 0.6 and 1.4 percentage points, respectively, from the forecasts in April. The projections assume the US Congress will approve President Joe Biden’s roughly $4 trillion in proposed infrastructure, education and family support spending largely as envisioned by the White House.

Positive spillovers from the US spending plans, along with expected progress in Covid vaccination rates, are boosting the IMF’s 2022 global growth forecast to 4.9%, up 0.5 percentage point from April.

The IMF cut its 2021 growth forecast for India, which has struggled with a massive wave of infections this year, by three percentage points to 9.5%. It also reduced its 2021 forecast for China by 0.3 percentage point, citing a scaling back of public investment and overall fiscal support. — Reuters

Pegs India’s GDP growth at 9.5%

• The IMF on Tuesday cut its growth forecast for India to 9.5% for the fiscal year to March 31, 2022 as the onset of a severe second Covid wave cut into recovery momentum
• This forecast is lower than the 12.5% growth in GDP that IMF had projected in April before the second wave took a grip
• For 2022-23, it expects economic growth of 8.5%, larger than the 6.9% it had projected in April