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The International Monetary Fund (IMF) in its World Economic Outlook update July 2022 has cut India's growth rate by 0.8 percentage point to 7.4 per cent for fiscal year 2022, reflecting ‘mainly less favourable external conditions and more rapid policy tightening’. It said that the global economy, which is still reeling from the pandemic and Russia’s invasion of Ukraine, is facing an increasingly gloomy and uncertain outlook. The IMF projects the global economy to slow further to 3.2 per cent in 2022 from last year’s 6.1 per cent. Global growth at 3.2 per cent in 2022 and moderating to 2.9 per cent in 2023 is lower than projected in the April 2022 World Economic Outlook by 0.4 and 0.7 percentage point, respectively.

It added that downgrades for China and the United States, as well as for India, are driving the downward revisions to global growth during 2022–23. This reflects the materialisation of downside risks highlighted in the April 2022 World Economic Outlook: a sharper slowdown in China due to extended lockdowns, tightening global financial conditions associated with expectations of steeper interest rate hikes by major central banks to ease inflation pressure, and spillovers from the war in Ukraine. It said for emerging markets and developing economies, the negative revisions to growth in 2022–23 reflect mainly the sharp slowdown of China’s economy and the moderation in India’s economic growth.

The report said India’s 7.4 per cent GDP growth for fiscal year 2022 is the second highest growth projection after Saudi Arabia’s 7.6 per cent. India, whose GDP was projected at 8.7 per cent in 2021, will see economic growth slow down to 6.1 per cent in fiscal year 2023. In April, the IMF had projected a ‘fairly robust’ growth of 8.2 per cent for India in 2022. United States’ growth projected to slow down to 2.3 per cent in 2022 from 5.7 per cent last year. In China, further lockdowns and the deepening real estate crisis have led growth to be revised down by 1.1 percentage points to 3.3 per cent growth in 2022, with major global spillovers. In Europe, significant downgrades reflect spillovers from the war in Ukraine and tighter monetary policy.