IMF Cuts India Forecast for FY22 to 9.5% from 12.5%

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IMF Cuts India Forecast for FY22 to 9.5% from 12.5%
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By Aditya Raghunath -- The International Monetary Fund (IMF) cut India’s GDP forecast to 9.5% from 12.5%, as it calculated the impact of the second pandemic wave on the country’s economy.

"Growth prospects in India have been downgraded following the severe second COVID wave during March–May and expected slow recovery in confidence from that setback," IMF said in its latest World Economic Outlook report.

"Recovery has been set back severely in countries that experienced renewed waves— notably India," it said. It added that as long as large parts of the population remain susceptible to the virus, recovery can’t be assured.

The pace of vaccinations in India is very slow, and it is unlikely that a large part of the population will be fully vaccinated by the end of 2022. Experts have also been warning of a third wave.

IMF’s forecast is in line with the Reserve Bank of India’s revision to 9.5% from 10.5% earlier. In June, S&P had also revised downwards its forecast for India to 9.5% in FY22.

IMF Chief Economist Gita Gopinath said, "The global economic recovery continues, but with a widening gap between advanced economies and many emerging markets and developing economies. Our latest global growth forecast of 6% for 2021 is unchanged from the previous outlook, but the composition has changed," Gopinath said.

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