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India’s economy to grow 5.7% in 2022, 4.7% in 2023: UNCTAD.
Oct 04, 2022

The United Nations Conference on Trade and Development (UNCTAD) expects India’s economy to grow 5.7% in 2022 and 4.7% in 2023. India’s gross domestic product (GDP) grew 8.7% in FY22.

In its annual Trade and Development Report 2022 released on Monday, it said that world economy is expected to grow 2.6% in 2022 which is 0.9 percentage points below the rate projected in last year’s report.

It cautioned that prospects appear to be worsening, with growth expected to decelerate further next year to 2.2%, leaving real GDP below its pre-Covid-19 trend by the end of 2023.

'India, the largest economy of the region, economic activity is being hampered by higher financing costs and weaker public expenditures, resulting in a deceleration in GDP growth to 5.7% in 2022,' UNCTAD said.

The Geneva-based body said that going forward, the government has announced plans to increase capital expenditure, especially in the rail and road sector but in a weakening global economy, policymakers will be under pressure to reduce fiscal imbalances, and this may lead to falling expenditures elsewhere.

'Under these conditions, economic growth is expected to drop by one percentage point to 4.7% in 2023,' it said.

While the Asian region has exhibited relatively dynamic growth rates over the last decade, it’s by no means immune to these deteriorating global conditions, according to UNCTAD.

Inflation, interest rates

The Trade and Development Report 2022 warned that rapid interest rate increases and fiscal tightening in advanced economies combined with the cascading crises resulting from the Covid pandemic and the war in Ukraine have already turned a global slowdown into a downturn with the desired soft landing looking unlikely.

'Monetary and fiscal policy moves in advanced economies risk pushing the world towards global recession and prolonged stagnation, inflicting worse damage than the financial crisis in 2008 and the Covid-19 shock in 2020,' it said.

In a decade of ultra-low interest rates, central banks consistently fell short of inflation targets and failed to generate healthier economic growth. Any belief that they will be able to bring down prices by relying on higher interest rates without generating a recession is, the report suggests, an imprudent gamble.

At a time of falling real wages, fiscal tightening, financial turbulence and insufficient multilateral support and coordination, excessive monetary tightening could usher in a period of stagnation and economic instability for many developing countries and some developed ones, UNCTAD said.

economictimes.indiatimes.com

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