After the optimistic predictions made by CII and Ficci surveys, the Modi government has gained yet another boost in the economic front. But this time the push has come from the International Monetary Fund (IMF), which has claimed that India has recovered from the economic slowdown.
In the World Economic Outlook released by it on Tuesday, the IMF projected slightly stronger growth in India in 2014 than its April Outlook projection — from 5.4 per cent to 5.6 per cent — and kept its 2015 projection unchanged at 6.4 per cent.
In a stance that could further endorse the Modi sentiment across the country and aid the BJP in the upcoming elections in Maharashtra and Haryana, IMF held that it anticipates economic growth to rise in the rest of 2014 and in 2015, spurred by a continuing pick-up in exports and investments that it projects will more than offset the effect of an unfavourable monsoon on agricultural growth.
IMF begs to differ from RBI:
The Reserve Bank of India on the other hand, had last week maintained that India has not fully recovered yet from the slowdown.
The IMF India forecast is more optimistic than that of the RBI, which, on September 30, said it expected growth during the remaining of 2014 to slow from the 5.7 per cent recorded in April-June and not to pick up before December.
“India has recovered from the slump thanks to policy decisions and renewed confidence,” Olivier Blanchard, IMF Chief Economist, said at a press conference on the Outlook’s release here.
Structural reforms should continue in all economies, though the agenda varies across countries, the Outlook recommended. For India, it specifically recommended improvement of investment conditions.
Global Projections:
The Outlook cut its world Gross Domestic Product growth to 3.3 per cent in 2014 and 3.8 per cent in 2015. The forecasts in April were 3.4 per cent for 2014 and 4 per cent in 2015. The Outlook, however, projects that the uneven global recovery is likely to continue despite setbacks.
World growth in the first half of 2014 was less than the levels the IMF projected in its April Outlook, reflecting a number of negative surprises such as unexpected weaker GDP growths in both China and the U.S. during January-April and rising geopolitical risks.
However, the Outlook notes that China has implemented measures to buttress its economy which have supported faster growth in April-June. The IMF’s China 2014 growth forecast remains unchanged at 7.4 per cent. The 2015 forecast too remains at the April level of 7.1 per cent.
“The world forecast is down starting with already low numbers, but it hides different economies are at different levels of adjustments [to the post Lehman 2008 collapse global economic slowdown] with some struggling still while others already or nearly recovered,” Mr. Blanchard told reporters here.
Growth in emerging markets and developing economies is projected to increase modestly in the second half of 2014 and into 2015, supported by stronger domestic demand for goods and services as well as a recovery in external demand arising out of faster growth in advanced economies.
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Tushita is a political writer at thenational.net. Her deep rooted interest in politics, passion for writing and craze for travelling define her. Writing since her school days, she aspires to write lifelong and make the world a happier place to live with the power of her pen.
