Ukraine-Russia War: IMF Slashes India's FY23 GDP Growth Forecast Sharply To 8.2 Per Cent

The IMF cited the negative impact of higher oil prices led by the Ukraine-Russia conflict on domestic consumption and private investment

The IMF recommended monetary tightening by central banks to keep inflationary expectations in check amid global supply side disruption. Image: Getty

New Delhi: The International Monetary Fund (IMF), in its latest World Economic Outlook report, on Tuesday sharply slashed India’s growth forecast to 8.2 per cent for FY23 from its earlier estimate of 9 per cent in January, according to news reports.

This was one of the steepest cuts for India compared to the IMF’s January WEO forecasts.

The IMF cited the negative impact of higher oil prices led by the Ukraine-Russia conflict on domestic consumption and private investment. It recommended monetary tightening by central banks to keep inflationary expectations in check amid global supply side disruption.

The agency has projected India’s growth to slow to 6.9 per cent in FY23 from 7.1 per cent estimated earlier.

The IMF said that the Ukraine war would “severely set back the global recovery", slow down the growth and increase inflation even further.

Earlier, the World Bank has cut India's GDP forecast for FY22-23 to 8 per cent. Meanwhile, the Reserve Bank of India (RBI) has also sharply cut India's growth projection at 7.2 per cent for FY22-23, while the second advance estimate of the Ministry of Statistics and Programme Implementation had said that GDP growth would be 8.9 per cent.

The IMF has also slashed its global growth outlook for calendar year 2022 to 3.6 per cent from 4.4 per cent saying that global economic prospects have worsened significantly due to commodity price volatility and disruption of supply chains caused by the war in Europe.

It said that both Russia and Ukraine could experience large GDP contractions.

The RBI Governor Shaktikanta Das said monetary policy committee said ongoing geopolitical tensions, generalised hardening of global commodity prices, the likelihood of prolonged supply chain disruptions, dislocations in trade and capital flows, divergent monetary policy responses and volatility in global financial markets are imparting sizeable upside risks to the inflation trajectory and downside risks to domestic growth.