Davos 2023: Tough year ahead but India in a relatively bright spot, says IMF's Gita Gopinath

Even as concerns related to an economic slowdown are evident across the globe and certain countries or geographies are indeed facing recessionary fears, India is in a relatively bright spot and many countries are looking at India as a favourable investment destination, said International Monetary Fund’s First Deputy Managing Director Gita Gopinath while speaking at the World Economic Forum (WEF) at Davos. 

“We have a tough year ahead (in) 2023. But we certainly are seeing signs of resilience around the world. So, in terms of a global recession, I think we are still a fair bit away from it… there are individual countries that are closer to a recession than others are,” said Gopinath while speaking to Business Today. 

“There's still a war. We still have inflation that's high. Monetary policy tightening that continues and we'll see the consequences of it. So, we should see a global economy that slows this year. But by the second half of this year, we expect to see a recovery and then rebound in 2024,” she added. 

More importantly, she said that India has showcased a strong recovery and it is in a relatively bright spot. 

“Compared to other countries, it's relatively a bright spot. So, I think it's in a good place. And importantly, many countries are looking at India (as an) investment destination at this point especially as they try to diversify out of other countries, including China,” she said. 

She also highlighted the fact that while countries and companies are looking at diversification and India can benefit from it, there is a risk attached to that strategy as well. 

“Without a doubt what the world needs to do is more diversification and, in that context, India certainly can benefit from it. The risk in countries trying to bring all the production home is… when one country does it, maybe it's beneficial to you, but you're going to have retaliation from the others… it usually leads to further trade wars, further retaliation, and then you end up in a world where things are much more costly for consumers and for firms,” she said.

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