World Economic Outlook

World Economic Outlook

Subject: Reports and Indices

Context: The International Monetary Fund (IMF) has cut India’s GDP growth estimate for FY22 by 300 basis points to 9.5 per cent from its April projection of 12.5 per cent

Concept:

World Economic Outlook

• WEO is a survey by the IMF that is usually published twice a year in the months of April and October.
• It analyses and predicts global economic developments during the near and medium term.
• In response to the growing demand for more frequent forecast updates, the WEO Update is published in January and July between the two main WEO publications released usually in April and October.

International Monetary Fund

• IMF is an organization working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
• Created in 1945, the IMF is governed by and accountable to the 189 countries that make up its near-global membership. India Joined on December 27, 1945.
• The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.
• The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

Projections

• 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
• It mentioned that countries lagging in vaccination, such as India and Indonesia, will suffer the most among G-20 economies
• it is higher than Moody’s forecast of 9.3 per cent and close to Crisil’s range of 8.2-9.8 per cent
• Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies, driven by a significant downgrade for emerging Asia
• It project global growth of 4.9 per cent, up from our previous forecast of 4.4 per cent.
• According to the fund’s estimate, the pandemic has reduced per capita incomes in advanced economies by 2.8 per cent, relative to pre-pandemic trends over 2020-22