IMF sees India as bright spot in global economy

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SME Times News Bureau | 14 Nov, 2015
Calling the Indian economy a bright spot "in an environment of increased uncertainty", the International Monetary Fund (IMF) on Thursday said India's growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices.

"Strong domestic demand in India should also be a positive factor in 2016," the IMF said in its latest report on global prospects and policy -- "IMF Developments, Outlooks, Risks".

In a noting relevant for India, the report said: "In many net commodity importers, lower commodity prices have alleviated inflation pressure and reduced external vulnerabilities."

"After a modest and uneven expansion in 2015, the global economy is expected to grow next year at 3.6 percent which, given sluggish global growth since the crisis, would be the fastest pace since 2011," said the report released here.

Listing three major "transitions" weighing on the global outlook as the US Federal Reserve's likely normalising of monetary policy, cooling of China's economy and end of the decade-long "commodity super cycle", the IMF said emerging economies' growth is projected to rebound in 2016.

"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)," it said.

"However, growth remains fragile and could be derailed if transitions are not successfully navigated. In an environment of declining commodity prices, reduced capital flows to emerging markets, and higher financial market volatility, downside risks to the outlook remain elevated, particularly for emerging economies," it added.

The IMF forecast last month that overtaking China, India is expected to grow at 7.3 percent in 2015, rising to 7.5 percent in 2016, thus lowering its April projections by 0.2 percentage points for 2015.

At this rate, India will grow faster than China where the economy is expected to slow down from 7.3 percent to 6.8 percent in 2015 and 6.3 percent in 2016, the IMF said in its October Update of 2015 Asia and Pacific Regional Economic Outlook.