HYDERABAD: The International Monetary Fund (IMF) on Tuesday revised downwards India’s economic growth projection to 7.3 per cent from its earlier estimate of 7.5% for the current fiscal.
The IMF joins a slew of financial bodies including the World Bank and Asian Development Bank, who have recently lowered the country’s GDP growth projections citing both domestic and macro economic slowdown.
This comes a day after the government stuck to its stand on exceeding the 7.5 per cent GDP growth target for this fiscal. IMF’s estimate is not only lower than the government’s estimate of 7.6 per cent growth but also RBI’s revised projection of 7.4 per cent.
The IMF’s World Economic Outlook 2015 released on Tuesday, however, expects growth to pick up pace in 2016 to 7.5 per cent and consumer prices to perk up slightly from 5.4 per cent this year to 5.5 per cent next year. Similarly, it expects current account deficit to come in at 1.4 per cent of the GDP. “Indian growth will benefit from lower commodity prices, recent policy reforms and a consequent pickup in investment. Growth in India is expected to rise above rates in other major emerging economies,” the IMF report said.
Meanwhile, the IMF, also slashed the global GDP growth forecast from 3.3 per cent to 3.1 per cent this fiscal. It, however, expects global growth to pick up to 3.6% next year.
At a press conference, IMF Chief Economist Maurice Obstfeld called for the need for ‘policy upgrades’ to the world economy, and outlined the need for fiscal and monetary policy accommodation for advanced economies and urged emerging economies to invest in infrastructure, carry out structural reforms and guard against currency volatility that may arise out of a Federal Reserve rate hike.
The IMF economist also warned against risks emerging from a Chinese slowdown, sparked by its transition to a consumer economy, and said emerging countries exports could suffer in the face of a strong US dollar and weak Chinese imports.
“The transition in China, while good for the long term, is expected to weigh on emerging economies in the near term.