India seen as fastest growing economy in FY22: IMF

NEW DELHI: India’s economy is expected to bounce back strongly in the next fiscal year with 11.5% growth, the International Monetary Fund (IMF) said recently, forecasting a sharp global recovery in 2021 after the havoc wrought by the pandemic.

India is the only major economy forecast to grow in double digits next year and forecast to follow that up with the highest 6.8% rise in the FY23 fiscal.

Policy support and vaccines are expected to lift economic activity across the world, the IMF said in its World Economic Outlook (WEO) update.

The latest forecast for India’s FY22 gross domestic product (GDP) marks an upward revision from the 8.8% growth the IMF had estimated in its last assessment in October.

“Notable revisions to the forecast include the one for India (2.7 percentage points for 2021 [FY22]), reflecting carryover from a stronger-than-expected recovery in 2020 after lockdowns were eased,” the IMF said.

The IMF also raised its India forecast for the current fiscal – it said the economy is likely to contract 8% compared with the 10.3% decline it had forecast in October.

The revisions came as July-September quarter GDP surprised on the upside, it said. India’s numbers are based on an April-March fiscal year while for the rest of the world the forecast is for the calendar year.

The results of a survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci) earlier this month matched the multilateral lender’s assessment, with the median expectation of FY21 growth at -8%, according to the quarterly Economic Outlook Survey.

The global economy is projected to grow 5.5% in 2021 and 4.2% in 2022, the IMF said.

It attributed the 0.3 percentage point upward revision for 2021 to “expectations of a vaccine-powered strengthening of activity later in the year and additional policy support in a few large economies.”

The IMF also saw a narrower 3.5% contraction in world output in 2020 as opposed to a 4.4% decline seen earlier, “reflecting stronger-than-expected momentum in the second half of 2020.”

It warned “surging infections in late 2020 (including from new variants of the virus), renewed lockdowns, logistical problems with vaccine distribution” were risks to this assessment.

Global trade volumes are forecast to grow about 8% in 2021. The IMF expects oil prices to rise in 2021 by just over 20% from the low base for 2020 but they will still remain well below their average for 2019.

Non-oil commodity prices are also expected to increase with those of metals, in particular, projected to accelerate strongly in 2021, it said.