India's growth will benefit from recent policy reforms: IMF

Posted By: PTI
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Washington, Nov 12: Stating that India's growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices, the IMF today projected a 7.5 per cent growth rate for India in 2016, against China's 6.3 per cent.

However for the current 2015 year, the IMF has projected 7.3 percent growth rate, which is 0.2 per cent less than its projection made for the year in July.

Policy reforms will push India's growth'

In emerging economies, growth will decline for the fifth year in a row in 2015, before strengthening next year, the IMF said in its report 'G-20: Global prospects and challenges' issued ahead of the G-20 Summit in Antalya, Turkey next week.

"Growth in China is expected to decline as excesses in real estate, credit, and investment continue to unwind. India's growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices," the report said.

In Brazil, weak business and consumer confidence amid difficult political conditions and a needed tightening in the macroeconomic policy stance are expected to weaken domestic demand, with investment declining particularly rapidly. In Russia, economic distress reflects the interaction of falling oil prices and international sanctions with preexisting structural weaknesses.

Emerging-economy growth is projected to rebound in 2016, reflecting mostly a less deep recession or an improvement of conditions in countries in economic distress (eg. - Brazil, Russia, and some countries in Latin America and the Middle East), the report said.

"Strong domestic demand in India should also be a positive factor in 2016," IMF said. "However, if the world economy's transitions are not successfully navigated, global growth could be derailed," it warned.

Prominent risks include: negative spillovers from China's growth transition; further falls in commodity prices; adverse corporate balance-sheet effects and funding challenges related to dollar appreciation and tighter global financing conditions; and capital flow reversals.

Any of these could substantially weaken the recovery, particularly in emerging and developing countries, the report said.


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