Says near-term growth prospects remain favorable
In its update to the World Economic Outlook released on Tuesday, the IMF cut growth projections for India by 0.2 per cent to 7.3 per cent for 2015-16. For 2016-17, it maintained its forecast of 7.5 per cent. Growth in India is expected to benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices. Further, inflation is expected to decline in 2015, reflecting the fall in global oil and agricultural commodity prices.
According to the update, in India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities. The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, but the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation.
The report also adds that continued fiscal consolidation is essential for the country, but it should be more growth friendly (tax reform, reduction in subsidies). With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened. Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors. Priorities include market-based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors.
For emerging markets as a whole, IMF lowered its growth projections by 0.2 per cent for both 2015 and 2016. These countries are expected to rise by four per cent and 4.5 per cent, respectively in both the years. This reflects a combination of factors: weaker growth in oil exporters, a slowdown in China with less reliance on import-intensive investment, adjustment in the aftermath of credit and investment booms, weaker outlook for exporters of other commodities as well as geopolitical tensions and domestic strife in a number of countries.
Advanced economies are expected to rise by two per cent and 2.2 per cent, respectively in 2015 and 2016. This is 0.1 per cent and 0.2 per cent lower than the growth projections of the IMF in the July update. Some pickup in growth of these countries is expected but medium-term prospects remain subdued reflecting a combination of lower investment, unfavorable demographics, and weak productivity growth.
Ref: https://goo.gl/ueEtGT
In its update to the World Economic Outlook released on Tuesday, the IMF cut growth projections for India by 0.2 per cent to 7.3 per cent for 2015-16. For 2016-17, it maintained its forecast of 7.5 per cent. Growth in India is expected to benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices. Further, inflation is expected to decline in 2015, reflecting the fall in global oil and agricultural commodity prices.
According to the update, in India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities. The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, but the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation.
The report also adds that continued fiscal consolidation is essential for the country, but it should be more growth friendly (tax reform, reduction in subsidies). With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened. Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors. Priorities include market-based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors.
For emerging markets as a whole, IMF lowered its growth projections by 0.2 per cent for both 2015 and 2016. These countries are expected to rise by four per cent and 4.5 per cent, respectively in both the years. This reflects a combination of factors: weaker growth in oil exporters, a slowdown in China with less reliance on import-intensive investment, adjustment in the aftermath of credit and investment booms, weaker outlook for exporters of other commodities as well as geopolitical tensions and domestic strife in a number of countries.
Advanced economies are expected to rise by two per cent and 2.2 per cent, respectively in 2015 and 2016. This is 0.1 per cent and 0.2 per cent lower than the growth projections of the IMF in the July update. Some pickup in growth of these countries is expected but medium-term prospects remain subdued reflecting a combination of lower investment, unfavorable demographics, and weak productivity growth.
Ref: https://goo.gl/ueEtGT
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