IMF lowers global growth; India to grow 7.5% in 2016

RSTV Bureau

imfThe Indian economy is expected to grow faster than major emerging economies in the world, revealed the International Monetary Fund (IMF) in its latest data for 2016.

IMF has projected a growth rate of 7.5 per cent for India in 2016 as against China’s 6.3 per cent.

“Growth in India is expected to rise above the rates in other major emerging market economies,” the IMF said in the latest World Economic Outlook Update released in Washington on Tuesday.

“India’s growth is expected to strengthen from 7.3 per cent this year to 7.5 per cent next year. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices,” the report said.

According to the report, inflation in India is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.

Meanwhile growth in China is expected to decline to 6.8 per cent this year. In 2016, China’s growth is expected to fall further fall to 6.3 per cent.

Meanwhile, global growth for 2015 is projected at 3.1 per cent, 0.2 per cent below the forecasts in the July 2015 World Economic Outlook (WEO) Update. The projected global growth for this year is 0.3 per cent lower than in 2014.

Modest pickup in advanced economies and a slowdown in emerging markets, primarily reflecting weakness in some large developing nations and oil-exporting countries, have been cited as the reason behind a fall in global growth.

In advanced economies, growth is expected to remain robust and above trend through 2016 and contribute to narrowing the output gap, IMF said.

“Six years after the world economy emerged from its broadest and deepest postwar recession, the holy grail of robust and synchronised global expansion remains elusive,” said Maurice Obstfeld, IMF Economic Counsellor and Director of the Research Department.

“Despite considerable differences in country-specific outlooks, the new forecasts mark down expected near-term growth marginally but nearly across the board. Moreover, downside risks to the world economy appear more pronounced than they did just a few months ago,” Obstfeld added.

While growth prospects in emerging markets and developing economies vary across countries and regions, the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 per cent in 2014 to 4 per cent in 2015.

The fifth straight year of slowing growth reflects a combination of factors – weaker growth in oil exporters, a slowdown in China with less reliance on commodity-intensive investment, adjustment in the aftermath of credit and investment booms, and a weaker outlook for exporters of other commodities, including in Latin America, following declines in their export prices, IMF said.

(With inputs from PTI)