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IMF retains India GDP forecast at 7.5%
20
Jan '16
The International Monetary Fund (IMF) has kept India's growth projection unchanged at 7.3 per cent in the current fiscal and 7.5 per cent in the next, even as it cut world economic outlook by 0.2 percentage points to 3.4 per cent for 2016.

In its update on World Economic Outlook (WEO), IMF said China's growth would slow to 6.3 per cent in 2016 and further to 6 per cent in 2017, but India would continue to grow at a "robust pace".

"India and the rest of emerging Asia are generally projected to continue growing at a robust pace, with some countries facing strong headwinds from China's economic rebalancing and global manufacturing weakness," IMF said.

The IMF forecast global growth at 3.4 per cent for 2016 and 3.6 per cent for 2017. It retained India's growth forecast at 7.3 per cent for the current fiscal and 7.5 per cent for 2016-17 and 2017-18.

"Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China's rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the US," the IMF said.

The IMF sounded a note of caution saying, "If these key challenges are not successfully managed, global growth could be derailed."

IMF said the pick-up in global activity is projected to be more gradual than in the October WEO, especially in emerging market and developing economies.

In the last WEO update released in October, IMF had projected India to grow at 7.3 per cent in the current fiscal and 7.5 per cent in 2016-17. As for world growth, it had put the figures at 3.6 per cent for 2016 and 3.8 per cent for 2017.

Emerging market and developing economies account for over 70 per cent of the global growth.

Maurice Obstfeld Economic Counselor and Director of Research at the IMF said, “The fundamental forces underlying our October World Economic Outlook projections have not dissipated and in some respects have intensified, leading us to trim our expectations for future medium term growth of the world economy. We still, however, expect growth to pick up this year in most countries. Despite the modesty of the reduction we see in general growth prospects and the promise of improvement in coming years downside risks to our central scenario have intensified. In our view, a focus on these risks is the main factor driving recent developments in financial markets. We may be in for a bumpy ride this year, especially in the emerging and developing economies.”

Obstfeld also acknowledged India's steady growth. “Growth prospects in parts of Asia have diminished somewhat as a result of the unexpectedly big spillovers from China. In contrast India continues to grow at the fastest pace among large emerging economies and in fact among all large economies,” he said. (SH)

Fibre2Fashion News Desk - India

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