IMF’s Projections
- Keeps India’s growth projection unchanged at 7.3 percent in the current fiscal and 7.5 percent in the next.
- Says China’s growth would slow to 6.3 percent in 2016 and further to 6 percent in 2017.
- Cuts world growth forecast to 3.4 percent for 2016 and 3.6 percent in 2017.
- Says China slowdown, lower oil prices and gradual tightening in US monetary policy would influence the global outlook.
The International Monetary Fund (IMF) on Tuesday kept India’s growth projection unchanged at 7.3 percent in the current fiscal and 7.5 percent in the next, even as it cut world growth forecast to 3.4 percent for 2016.
In its update on World Economic Outlook (WEO), IMF said China’s growth would slow to 6.3 percent in 2016 and further to 6 percent in 2017, but India would continue to grow at a “robust pace”.
IMFIndia 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.
As for global growth, IMF today forecast 3.4 percent rise in 2016 and 3.6 percent in 2017.
“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 United States,” IMF added.
“If these key challenges are not successfully managed,global growth could be derailed,” it cautioned.
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 percent in the current fiscal and 7.5 percent in 2016-17. As for world growth, it had put the figures at 3.6 percent for 2016 and 3.8 percent for 2017.
Emerging market and developing economies account for over 70 percent of the global growth.
IMF said in advanced economies, a modest and uneven recovery is expected to continue, with a gradual further narrowing of output gaps.
IMFThe picture for emerging market and developing economies is diverse, but in many cases challenging. The slowdown and rebalancing of the Chinese economy, lower commodity prices and strains in some large emerging market economies will continue to weigh on growth prospects in 2016-17.
The three key transitions that would influence the global outlook, it said, include gradual slowdown and rebalancing of economic activity in China from investment and manufacturing to consumption and services.
Also, lower prices for energy and other commodities, and a gradual tightening in monetary policy in the United States in the context of a resilient US recovery are also expected to have a bearing on global outlook.
IMF said oil prices have declined markedly since September 2015 in anticipation of sustained increases in production by the Organisation of the Petroleum Exporting Countries (OPEC) in an already oversupplied market.
IMF projected advanced economies’ growth to rise by 0.2 percentage point in 2016 to 2.1 percent and hold steady in 2017.
Growth in emerging market and developing economies is projected to increase from 4 percent in 2015 - the lowest since the 2008-09 financial crisis - to 4.3 percent and 4.7 percent in 2016 and 2017, respectively.
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