United Nations: According to a UN report, as the Ukraine conflict has an impact on global GDP, India is expected to grow by 6.4 percent in 2022, slower than last year’s 8.8 percent but still the fastest-growing major economy, with higher inflationary pressures and uneven labor market recovery stifling private consumption and investment.
The UN Department of Economic and Social Affairs said in its World Economic Situation and Prospects (WESP) report released on Wednesday that the war in Ukraine has upended the fragile economic recovery from the pandemic, triggering a devastating humanitarian crisis in Europe, increasing food and commodity prices and globally exacerbating inflationary pressures.
The global economy is now projected to grow by only 3.1 per cent in 2022, down from the 4.0 per cent growth forecast released in January 2022. Global inflation is projected to increase to 6.7 per cent in 2022, twice the average of 2.9 per cent during 2010-2020, with sharp rises in food and energy prices, it said.
The report also said, that the outlook in South Asia has deteriorated in recent months, against the backdrop of the ongoing conflict in Ukraine, and higher commodity prices and potential negative spillover effects from monetary tightening in the United States.
In 2022, regional economic output is expected to grow by 5.5 percent, which is 0.4 percentage points less than the January prediction.
“India, the largest economy in the region, is expected to grow by 6.4 per cent in 2022, well below the 8.8 per cent growth in 2021, as higher inflationary pressures and uneven recovery of the labour market will curb private consumption and investment,” it said.
India’s growth rate is expected to reach 6% in fiscal year 2023.
Except for East Asia and South Asia, practically all regions of the world are impacted by high inflation, according to Hamid Rashid, Lead Author and Chief, Global Economic Monitoring Branch, Economic Analysis and Policy Division, United Nations Department of Economic and Social Affairs.
In that sense, he said, “India is a little bit better off” than other Latin American countries since it did not have to seek extreme monetary tightening.
The United States economy is expected to grow by 2.6 per cent in 2022 and 1.8 per cent next year, while China is expected to grow by 4.5 per cent in 2022 and 5.2 per cent in 2023. The developing countries, as a group, are projected to grow by 4.1 per cent in 2022, down from 6.7 per cent in 2021, the report said.
“We need quick and decisive action to ensure a steady flow of food and energy in open markets, by lifting export restrictions, allocating surpluses and reserves to those who need them, and addressing food price increases to calm market volatility,” he said.
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