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India's growth to outpace Chi's: IMF

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  10 July 2015 12:00 AM GMT

Washington, July 9: India is set to decisively outpace Chi in economic growth this year, and emerge not just as the fastest-expanding economy but also as just a handful of countries to show some acceleration, as per the latest report of the Intertiol Monetary Fund (IMF).

The fund, in an update released here on Thursday, has projected India's growth at 7.5 percent this year, against 6.8 percent for Chi. While the growth outlook on India for 2016 has been retained at 7.5 percent, that for Chi is pegged 50 basis points lower at 6.3 percent.

“Global growth is projected at 3.3 percent in 2015, margilly lower than in 2014, with a gradual pickup in advanced economies and a slowdown in emerging market and developing economies. In 2016, growth is expected to strengthen to 3.8 percent,” said the IMF update on World Economic Outlook.

“In emerging market economies, the continued growth slowdown reflects several factors, including lower commodity prices and tighter exterl fincial conditions, structural bottlenecks, rebalancing in Chi, and economic distress related to geopolitical factors,” it said.

But in advanced economies, it said, the growth was projected to increase from 1.8 percent in 2014 to 2.1 percent in 2015 and 2.4 percent in 2016 - which was a more gradual pickup than what was forecast in the April scerio. It also remained positive on the overall outlook.

“A rebound in activity in a number of distressed economies is expected to result in a pickup in growth in 2016,” it said. While the update did not mention India in its commentary, the tables appended with the study gave the growth projections.

This apart, it said further increase in fincial market volatility remaind an important downside risk. “Term and risk premiums on longer-term bonds are still very low, and there is a possibility of markets reacting strongly to surprises in this context,” it said.

“Such asset price shifts also bear risks of capital flow reversals in emerging market economies.”

On the global economy, the fund did not paint a bright picture. In the first quarter of 2015 — the starting point for the latest update — world growth at 2.2 percent fell 80 basis points short of the forecast made in April 2015.

The shortfall, it said, reflected to an important extent an unexpected output contraction in the US, with attendant spillovers to Cada and Mexico. One-off factors like a harsh winter, closure of port closures and downsising of expenditure in the oil economy weakened US activity. IANS

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