India Will Remain World’s Fastest Growing Economy in 2022
India is projected to retain the tag of fastest growing economy in the world with the International Monetary Fund (IMF) forecasting 8.5 percent growth for the year 2022. In its latest World Economic Outlook report released on Tuesday, the IMF said that the Indian economy is expected to grow by 9.5 percent in 2021 and 8.5 percent in the next year.
The announcement comes as a positive sign for the economy which is recovering from the slump created by the Covid-19 pandemic. In FY21, the economy had witnessed a negative growth of 7.3 percent, first time in almost 40 years.
India also witnessed its first technical recession last year with two consecutive quarters of negative growth in wake of the nationwide lockdowns to curb the spread of Covid-19 pandemic. However, with cases declining, economic activities in the country are gradually regaining pace with the economy witnessing record 20.1 percent rise in gross domestic product (GDP) in Q1 of FY22. The growth can be largely attributed to a low base effect and resumption of business activities.
The report praised India for its vaccination drive against the Covid virus and therefore helping in economic recovery. The global growth projection for 2021 has been revised down marginally to 5.9 per cent and is unchanged for 2022 at 4.9 per cent. However, this modest headline revision masks large downgrades for some countries.
The United States is projected to grow at 6 per cent this year and 5.2 per cent the next year. China, on the other hand, is projected to grow at 8 per cent in 2021 and 5.6 per cent in 2022.
“The outlook for the low-income developing country group has darkened considerably due to worsening pandemic dynamics. The downgrade also reflects more difficult near-term prospects for the advanced economy group, in part due to supply disruptions,” Gopinath said.
“Partially offsetting these changes, projections for some commodity exporters have been upgraded on the back of rising commodity prices. Pandemic-related disruptions to contact-intensive sectors have caused the labour market recovery to significantly lag the output recovery in most countries. Aggregate output for the advanced economy group is expected to regain its pre-pandemic trend path in 2022 and exceed it by 0.9 per cent in 2024 ,” the Indian-American economist added