India to grow at 12.5 pc in FY 22, predicts IMF

The IMF in its  latest edition of World Economic Outlook,  said it expects India's  GDP at 12.5 per cent in FY22 the highest among emerging and  advanced economies.

The GDP growth for FY23 is pegged at 6.9 per cent.

For  the emerging and developing Asia regional group, the IMF revised projections for 2021 up by 0.6 percentage point, "reflecting a stronger  recovery than initially expected after lockdowns were eased in some  large countries (for example, India)."

"We are now projecting a stronger recovery for the global economy  compared with our January forecast, with growth projected to be 6  per cent in 2021 (0.5 percentage point upgrade) and 4.4 per cent in 2022  (0.2 percentage point upgrade), after an estimated historic contraction  of -3.3 percent in 2020," said Chief Economist Gita Gopinath.

She said the upgrades in global growth for  2021 and 2022 are mainly due to upgrades for advanced economies,  particularly a sizeable upgrade for the United States (1.3 percentage  points) that is expected to grow at 6.4 per cent this year.

"Other  advanced economies, including the euro area, will also rebound this  year but at a slower pace. Among emerging markets and developing  economies, China is projected to grow this year at 8.4 per cent. While  China's economy had already returned to pre-pandemic GDP in 2020, many  other countries are not expected to do so until 2023," Gopinath said.

After an  estimated contraction of -3.3 per cent in 2020, the global economy is  projected to grow at 6 per cent in 2021, moderating to 4.4 per cent in  2022.

And yet, Gopinath said the future presents daunting challenges. "The pandemic is yet to be  defeated and virus cases are accelerating in many countries.

Recoveries  are also diverging dangerously across and within countries, as economies  with slower vaccine rollout, more limited policy support, and more  reliance on tourism do less well."

She said policymakers will need to continue supporting their economies while  dealing with more limited policy space and higher debt levels than prior  to the pandemic.

"This requires better-targeted measures to leave space  for prolonged support if needed. With multispeed recoveries, a tailored  approach is necessary, with policies well-calibrated to the stage of the  pandemic, the strength of the economic recovery, and the structural  characteristics of individual countries."

Also, emphasis should be on "escaping the health crisis by  prioritizing healthcare spending-on vaccinations, treatments, and  healthcare infrastructure.

"Fiscal support should be well targeted to  affected households and firms. Monetary policy should remain  accommodative (where inflation is well behaved), while proactively  addressing financial stability risks using macroprudential tools," she  added.