The International Monetary Fund (IMF) on Tuesday slashed its FY22 growth forecast for India by 300 basis points from its April projection to 9.5 per cent, the sharpest cut for any country, citing the damage caused by the second Covid wave that raised in May. For the next fiscal, however, the Fund has increased the growth projection for the country to 8.5 per cent from 6.9 per cent.

While the multilateral body retained its global growth forecast at 6 per cent for 2021, it trimmed its earlier projection by 40 bps for developing countries and raised it by 50 bps for advanced economies. Risks around the global baseline projections are, however, to the downside, it cautioned. Countries lagging in vaccination, such as India and Indonesia, would suffer the most among G20 economies, it mentioned.

The IMF also revised up its predictions of global trade volume growth by a sharp 130 bps for 2021 to 9.7 per cent and 50 bps for 2022 to 7 per cent. India is set to benefit from an expected rise in global trade prospects once its supply side gains traction.

“Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising Covid death tolls,” IMF stated in its latest World Economic Outlook forecast.