‘India, China to account for…’ IMF chief on global economic growth in 2023
2 min read 07 Apr 2023, 05:49 AM ISTAccording to Kristalina Georgieva, a sharp slowdown in the world economy last year due to the raging pandemic and Russia's military invasion of Ukraine would continue this year.
PremiumInternational Monetary Fund (IMF) chief Kristalina Georgieva said that the world economy is expected to grow at less than 3 percent this year, with India and China expected to account for half of global growth in 2023.
According to Georgieva, a sharp slowdown in the world economy last year due to the raging pandemic and Russia's military invasion of Ukraine would continue this year.
The period of slower economic activity will be prolonged, with the next five years witnessing less than 3 per cent growth, “our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades," she said.
Further explaining, she said, “Some momentum comes from emerging economies — Asia especially is a bright spot. India and China are expected to account for half of global growth in 2023."
But low-income nations are hamstrung by weakening demand for their exports, with their per-capita income growth remaining below that of the emerging economies. Poverty and hunger that increased during the coronavirus pandemic could climb.
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For 2023, global gross domestic product will likely expand by less than 3 percent, she said. That’s in line with the fund’s January forecast of 2.9 percent.
“After a strong recovery in 2021 came the severe shock of Russia’s war in Ukraine and its wide-ranging consequences — global growth in 2022 dropped by almost half, from 6.1 to 3.4 per cent," Georgieva added.
Georgieva said slower growth would be a “severe blow," making it even harder for low-income nations to catch up.
"Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis," she explained. Her comments come ahead of next week's spring meetings of the IMF and the World Bank, where policy-makers will convene to discuss the global economy's most pressing issues.
The annual gathering will take place as central banks around the world continue to raise interest rates to tame galloping inflation rates. About 90 per cent of advanced economies are projected to see a decline in their growth rates this year, she said.
For low-income countries, higher borrowing costs come at a time of weakening demand for their exports, she said.
Georgieva added that while the global banking system had “come a long way" since the 2008 financial crisis, “concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks. “Now is not the time for complacency."
Earlier, a working paper by IMF said that India's development of a "world-class digital public infrastructure" serves as a model for other nations undergoing digital transformation. The paper, titled 'Stacking up the Benefits Lessons from India's Digital Journey,' credited India's building block approach and focus on supporting innovation for the success of its digital public infrastructure (DPI). The paper emphasised the need for interoperability between different DPIs and competition-focused design to support a vibrant ecosystem. India's interoperability supported through open standards, allowing anyone to use India Stack's functionality.
Meanwhile, The Reserve Bank of India (RBI) announced that there will be no change in repo rate, which is to remain at 6.5 percent and inflation was projected at 5.2 percent.
(With inputs from PTI)
