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.
Following Policy Reforms have been suggested for India:
- Expanding the manufacturing base
- Providing easy entry and exit for businesses
- To reduce labour and product market irregularities
- To productively employ abundant labour force
- 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.