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IMF downgrades India’s GDP growth forecast to 6.6%

The International Monetary Fund expects India’s growth to pick up at a slower pace in 2017-18.

Jan 17, 2017 16:23 IST
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IMF released Economic Outlook= The International Monetary Fund (IMF) on 16 January 2017 released the World Economic Outlook Update 2016 in Washington DC, the USA.

The update estimated the global growth at 3.1 percent in 2016. The growth forecast is in line with the October 2016 forecast.

With regard to India, the update projected India’s Gross Domestic Product (GDP) growth rate at 6.6% in 2016-17 against its earlier estimate of 7.6%. For 2017-18, the growth rate is trimmed by 0.4 percentage points.

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The slash in growth rates was due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal.

Highlights of World Economic Outlook Update 2016

• After a lackluster growth in 2016, economic activity is projected to pick up pace in 2017.

• This forecast is based on the assumption of a changing policy mix under a new administration in the United States and its global spill overs.

• This projection is consistent with the rise in equity prices and the sizable appreciation of the U.S. dollar since the November 2016 presidential election.

• Global activity could accelerate more strongly if policy stimulus turns out to be larger than currently projected in the United States or China.

• Among advanced economies, activity rebounded strongly in the United States after a weak first half of 2016. Consequently, the economy is approaching full employment in the USA.

• Output remains below potential in a number of other advanced economies, notably in the euro area.

• The growth scenario in emerging market and developing economies (EMDEs) remains much more diverse.

• Supported by continued policy stimulus, the growth rate in China was a bit stronger than expected in the second half of 2016.

• Reflecting an agreement among major producers to trim supply, oil prices have increased in recent weeks.

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