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IMF trims India’s growth forecast to 7.2 per cent for 2017

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In the latest World Economic Outlook (WEO), International Monetary Fund (IMF) has cut down India’s growth forecast for year 2017 by 0.4 percentage points to 7.2 %.

  • For Fiscal Year 2016-17, it has pegged India’s growth at 6.8%. The report states that demonetisation drive by the Govt., affected the cash flow in the system and disrupted the consumption pattern in India.
  • However, as per the report, India’s growth prospects in medium term are favourable. If reforms are carried out as per the plans and supply-side concerns are addressed, India’s growth rate is expected to be 8% in the medium term.

IMF newFollowing Policy Reforms have been suggested for India:

  1. Expanding the manufacturing base
  2. Providing easy entry and exit for businesses
  3. To reduce labour and product market irregularities
  4. To productively employ abundant labour force

Global Outlook:

  • As per the WEO, global economy is expected to grow at 5% in 2017 as compared to 3.1% in 2016.
  • US economy is expected to grow at 3% in 2017 as compared to 1.6% in 2016.
  • Chinese economy will grow at 6% and along with India and Russia it will be the flag bearer for growth in emerging markets.
  • Overall, global economy is on an upswing and positive trend has been observed in trade, investment and manufacturing.
  • IMF has cautioned world leaders to refrain from raising trade barriers. It believes that such inward-looking policies may jeopardize the global economic recovery process.

World Economic Outlook Report:

  • World Economic Outlook (WEO) is published by the International Monetary Fund. It is published biannually and is also updated twice in between.
  • It provides short term and medium term growth projections for global economy as a whole and also for 180 countries separately. It provides forecasts for key macroeconomic indicators viz. inflation, fiscal deficit and trade deficit.