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India keeps top global spot with 9.5% GDP growth
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SME Times News Bureau | 12 Oct, 2021
India has emerged from a "very tough second wave" of Covid-19, Gita
Gopinath, the International Monetary Fund's (IMF) Chief Economist, said
on Tuesday at the release of the flagship report that showed India
continuing to be the world's fastest growing major economy clocking a
growth rate of 9.5 per cent this fiscal year and 8.5 per cent in the
next.
The IMF's World Economic Outlook (WEO) report kept the
gross domestic product (GDP) growth projections it had made in July
while India was in the grip of Covid-19's second wave and had cut by 3
per cent its forecast of 12.5 per cent made in April before the
pandemic's resurgence.
Briefing reporters at the release of the
report in Washington, Gopinath said: "India, came out of a very, very
tough second wave and that led to a big downgrade in July but we have no
change."
"India is doing well in terms of vaccination rates and that's certainly helpful," she said.
India does, however, face many challenges, she noted.
"As
of now, you know there are many challenges that the Indian economy
always does face with regard to the financial market, with regard to the
fact that the virus has not gone yet," Gopinath said.
Asked if
the large fiscal deficit in India was a major concern, Malhar Nabar, the
Deputy Division Chief in IMF Research Department, said that while a
medium-term strategy was needed to bring it down, it was still possible
to meet the pressures from any future pandemic upsurge.
"We
think that there's still room to provide more support if needed, if the
pandemic takes a turn for the worse, and to provide it in a targeted
manner to the worst affected households and firms," he said.
"But
going forward over the medium term, it would be important to put in
place, credible, medium term strategy to bring down the debt to GDP
ratio and create space to meet the future development needs and
infrastructure needs," he added.
The WEO said that India's Covid-battered economy had shrunk by 7.3 per cent in the last fiscal year.
Its long-term forecast for India's GDP growth is 6.1 per cent in 2026.
In
the WEO tables, China followed India with eight per cent this year and
5.6 per cent the next -- a reduction of 0.1 per cent for both years from
the forecast made in July.
The UK came next with 6.8 per cent growth this year, followed by France at 6.5 per cent, and the US at six per cent.
The
global economy is projected to grow 5.9 per cent in 2021 and 4.9 per
cent in 2022 -- 0.1 percentage point lower for 2021 than in the July
forecast.
The WEO said: "The downward revision for 2021 reflects a
downgrade for advanced economies -- in part due to supply disruptions
-- and for low-income developing countries, largely due to worsening
pandemic dynamics."
Gopinath, in her foreword to the WEO, said:
"The global recovery continues but the momentum has weakened, hobbled by
the pandemic."
She wrote about the global picture: "Fuelled by
the highly transmissible Delta variant, the recorded global Covid-19
death toll has risen close to 5 million and health risks abound, holding
back a full return to normalcy. Pandemic outbreaks in critical links of
global supply chains have resulted in longer-than-expected supply
disruptions, further feeding inflation in many countries."
"Overall, risks to economic prospects have increased, and policy trade-offs have become more complex," she warned.
The
WEO projected a wary outlook: "Overall, the balance of risks for
(global) growth is tilted to the downside. The major source of concern
is that more aggressive SARS-CoV-2 (Covid-19) variants could emerge
before widespread vaccination is reached."
The WEO, which
stressed the importance of vaccination, said: "The development of
Covid-19 vaccines was encouraged by unprecedented public support."
As an example, it cited the help in scaling up manufacturing by the Indian government grants to vaccine producers.
The
IMF forecast is more than a per cent higher than the World Bank's
estimate of 8.3 per cent for this fiscal year, which puts it behind
China's 8.5 per cent growth this year.
The Bank's Regional
Economic Update released last week said India's GDP growth is expected
to moderate to 7.5 per cent next year and 6.5 per cent in 2023-24.
The
United Nations, which made its forecast for the calendar year, rather
than the fiscal, said it expected India's economy to grow by 7.5 per
cent this calendar year and rebound to 10.5 per cent next year.
India's
consumer price index is expected to grow by 5.6 per cent this fiscal
year and by 4.9 the next, according to the IMF's WEO.
The
Maldives, whose economy shrunk by 32 per cent last year, is expected to
rebound to 18.9 per cent this year and moderate to13.2 per cent next
year, the WEO said.
Elsewhere in South Asia, growth is expected
to be slower. Pakistan's GDP is forecast to grow by 3.9 per cent this
year, and by 4 per cent the next, and Bangladesh by 4.6 per cent this
year and 6.5 per cent the next year, according to the WEO.
Sri
Lanka's growth is forecast to grow 3.6 this year and moderate to 3.3
next year, while Nepal's GDP is expected to grow by 1.8 per cent this
year and then rebound to 4.4 per cent, the report said.
Bhutan's
economy is forecast to continue to shrink by 1.9 per cent this year,
but grow by 4.2 per cent next year, according to the WEO.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
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64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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