World Economic Outlook : Countering the Cost-of-Living Crisis

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    In News 

    • Recently, the International Monetary Fund released World Economic Outlook, October 2022: Countering the Cost-of-Living Crisis.

    Major Findings 

    • Globally
      • Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. 
      • The cost-of-living crisis, tightening financial conditions in most regions, Russia’s invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook.
      •  Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023.
    • India : It trimmed its FY23 growth forecast for India by 60 basis points from its July projection of 7.4% to 6.8%
      • IMF expects India’s retail inflation to shoot up to 6.9% in FY23 before easing to 5.1% in the next fiscal, compared with 5.5% in FY22.

    Suggestions 

    • Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. 
    • Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.

    Source:TH