International Monetary Fund has retained its growth forecasts for India at 7.5 per cent in FY 17 and 18, however, it further altered projections for global economic growth for 2016 and the year after that citing loss of growth momentum in the advanced economies and continuing headwinds for emerging countries.
The IMF had estimated India's GDP growth in FY 16 at 7.3 per cent, before moving it to 7.5 per cent in the coming two fiscal. In its latest World Economic Outlook, it said sustaining strong growth over the medium term would require labour market reforms and dismantling of infrastructure bottlenecks, especially in the power sector. “In India, monetary conditions remain consistent with achieving the inflation target of 5 per cent in the first half of 2017, although an unfavourable monsoon and an expected public sector wage increase pose upside risks,” it noted.
IMF has also forecast global growth at 3.2 per cent in 2016 and 3.5 per cent in 2017, a downward revision of 0.2 percentage point and 0.1 percentage point, respectively. Cumulatively, since October 2015, IMF has lowered world GDP growth projection by 0.4 and 0.3 percentage point in 2016 and 2017, respectively. Growth in China was slightly stronger than previously forecast even as the IMF cut US growth by 0.2 percentage point for 2016 and by 0.1 percentage point in 2017.
In a statistical analysis, the fund also warned that the British exit from the European Union could inflict severe damage to the world economy by disrupting international trade. It listed the June 23 referendum on membership as one-of-seven downside risks for the world economy.
