India to retain fastest growing economy tag next year too: IMF
The IMF has predicted India to grow faster than other emerging economies
Washington: The International Monetary fund (IMF) has predicted Indian economy to grow faster as compared to other emerging economies, projecting a growth rate of 7.5 per cent for India in 2016 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 its latest World Economic Outlook update.
"India's growth is expected to strengthen from 7.3 per cent this year and last year to 7.5 per cent next year. Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices," it said.
According to the report, inflation is expected to decline further in India this year, owing to the fall in global oil prices and agricultural commodity prices. Global growth for 2015 is projected at 3.1 per cent, 0.3 per cent point lower than in 2014, and 0.2 per cent point below the forecasts in the July 2015 World Economic Outlook (WEO) Update.
The forecast also assumes that policy action will be constantly reducing vulnerabilities from recent rapid credit and investment growth and hence not aim at fully offsetting the underlying moderation in activity, it said.
Previous excesses in real estate, credit, and investment continue to loosen, with a further moderation in the growth rates of investment, especially that in residential real estate, it said.
On the other hand, growth in China is expected to decline by 6.8 per cent this year and 6.3 per cent in 2016. In developed economies, growth is expected to remain steady and above trend throughout 2016 which shall be a huge contribution for further narrowing the output gap.
The growth recovery in the euro area is projected to be quite broad-based. In Latin America and the Caribbean, activity is expected to rebound in 2016 after a recession in 2015, it said.
“The ‘holy grail’ of robust and synchronised global expansion remains elusive,” IMF chief economist Maurice Obstfeld said.
Six years after the world emerged from a financial crisis and recession, the deteriorating picture showed a global recovery that’s uneven still from Australia to Germany. Brazil and Russia’s economies are contracting, Japan and the euro area are struggling to impress, and long-time growth engine China is decelerating.
Meanwhile, the US economy is nearly strong enough for central bankers to consider raising interest rates.
IMF cautions emerging economies
The IMF advised emerging markets to be ready for the US to tighten monetary policy, urged advanced economies to address “crisis legacies” and suggested nations consider the “compelling” case for public infrastructure investment at a time of very low long-term interest rates.