International Monetary Fund retains economic growth projection for India at 7.3% for FY19

Mae Love
October 10, 2018

Meanwhile, in own speech, the IMF Economic Counsellor and Director of Research Department, Mr. Maurice Obstfeld at a press briefing on the World Economic Outlook (WEO), in Bali, Indonesia, yesterday said the Fund has cut global growth projection to 3.7 per cent for this year and next year.

While the IMF's outlook for the Chinese economy stayed at 6.6% this year, its forecast for next year of 6.2% represents the slowest growth rate the Asian country has seen since 1990.

Acceleration in the growth rate from 2017-18 reflects a rebound from transitory shocks (the currency exchange initiative and implementation of the goods and services tax), with strengthening investment and robust private consumption, the International Monetary Fund said.

In its report the International Monetary Fund said the tit-for-tat tariffs imposed by the USA and China, weaker performances by eurozone countries, Japan and Britain all conspired to increase pressure on the global economy, while "the possible failure of Brexit negotiations poses another risk".

It predicted 2.9 percent US growth this year, dropping to 2.5 percent next year, and to 1.8 percent in 2020, as the effect of USA tax cuts wears off and the trade war with China inhibits growth.

Global trade tensions would also have a bearing on the eurozone's 2018 growth forecast, which was cut to 2 percent from 2.2 percent previously.

The US simultaneously threatened to add tariffs to a further $267 billion (£205 billion) of products, which saw China retaliate with 10 percent tariffs on $60 billion (£46 billion) of US imports.

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The Fund said that revenue gains from non-financial public corporations and government financial assets alone could be as high as 3 per cent of GDP a year, equivalent to the annual corporate tax collections across advanced economies.

The global body, in its World Economic Outlook, also downgraded its growth forecast for India for 2019-'20 from 7.5% to 7.4%. It predicted China's GDP growth at 6.6% in 2018-'19 and downgraded it to 6.2% for 2019-'20. Over the medium term, growth is expected to gradually slow to 5.6 per cent as the economy continues to make the transition to a more sustainable growth path with continued financial de-risking and environmental controls, it noted.

Pakistan's central bank issued a statement on October 9 saying the plunge in the rupee was due in part to rising oil prices, which have hiked the cost of imported oil and thus are putting pressure on Pakistan's large trade deficit.

The IMF now expects next year's growth rate to come to 2.4 percent, against 1.8 percent in April.

"Looking ahead, renewed impetus to reform labour and land markets, along with further improvements to the business climate, are also crucial", it said.

The UK economy is expected to grow by 1.4 percent this year - down from April's prediction of 1.6 percent - while predicted growth for 2019 remains at 1.5 percent, a slowdown from 1.7 percent in 2017.

According to him, the report showed that the negative revisions for emerging markets and developing economies would be more severe, at minus 0.2 and 0.4, respectively.

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