Kristalina Georgieva, the managing director (MD) of the International Monetary Fund (IMF) believes the Indian economy is a bright spot and the focus on the macroeconomic balance and the focus on reforms have helped the Indian economy tremendously.
In an interview with The Economic Times (ET), Georgieva said the Indian Budget indicated fiscal discipline and directed more attention to capital spending, which is fundamental for long-term growth.
"It has helped tremendously--the focus on reforms that we have seen over the last years, with very, very dramatic, very important systemic reforms, especially on the tax harmonisation side," said Georgieva.
"On the way, India pursues digitalisation, which has played a huge role for India. India is offering the world the concept of using public digital infrastructure as a foundation for both public services to improve and the private sector to blossom," Georgieva said.
Georgieva believes global economic growth is bottoming out and inflation is coming down.
“Things look less bad. And what has happened is first, resilient labour markets and consumers in the US and in Europe. Second, very rapid action in the European countries to free themselves from dependency on Russian oil and gas that allows their economies to move up and three, China reopening making China again a contributor to global growth,” Georgieva said.
"We see signs that inflation may be finally going in the right direction--in other words, down. So we have on one side still the concern that growth this year is decelerating. It is slowing down further. And last year, it wasn't very high, to begin with--3.4 percent for 2022. Now we predict 2.9 percent for 2023. But (there are) some signs that growth is bottoming out and inflation is trimming down," Georgieva told ET.
On rate hikes, Georgieva highlighted that it is important for the US Fed to stay the course in order to bring inflation down as the US economy remains strong.
"The fact that the US consumer is spending as the economy is working and unemployment is incredibly low, historically low, means that the job of the US Federal Reserve to tighten and bring inflation down is harder," said Georgieva.
"It is very important, though, that the Fed stays the course. Why? Because if we do not return to price stability, that is a big impediment to growth, to investors to invest, to consumers to make long-term purchases," Georgieva told ET.
Disclaimer: This article is based on an ET interview. The views and recommendations given in this article do not represent the views of MintGenie.