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IMF Revises India's Growth Forecast for 2014
Oct 17, 2014

In a major boost to India, the International Monetary Fund (IMF) has revised India’s 2014 GDP growth projection marginally upwards to 5.6% from its July forecast of 5.4%. The IMF’s flagship World Economic Outlook (WEO) Report, however, has left its projection for India’s 2015 GDP growth unchanged at 6.4 percent. The report said growth in India is likely to increase in the remaining period of 2014 as well as in the entire 2015 because exports and investment will continue to pick up and more than offset the effect of an unfavorable monsoon on agricultural growth earlier in the year. 

However, India should ensure an improvement in investment conditions, remove infrastructure bottlenecks in the power sector. The IMF warned that infrastructure bottlenecks in India are not just a medium-term worry but remain a constraint even on near-term growth. In order to raise competitiveness and productivity, India must implement reforms to education, labour, and product markets.

India has recovered from its relative slump, thanks in part to effective policies and a renewal of confidence, growth is expected once again to exceed 5% (from 4.7% in 2012 and 5% in 2013). 

In contrast, however, the IMF, for the third time in 2014, slashed its projections for global economic growth. The report projected world output to grow at 3.3% this year (0.1% down from its July update). It has forecast the world output growth in 2015 at 3.8% (a 0.2% cut from its July forecast).

Among major emerging markets, it said though growth will pick up in India, there will be a modest slowdown in China. Growth in Brazil and Russia will stay subdued, and the growth in core Euro zone nations will be weaker. The legacies of the financial crisis continue to impact the eurozone. The US and Britain, however, are seeing stronger growth.

The IMF projected that by 2019, India’s GDP growth is likely to be 6.7 percent returning to what it was in 2011 (6.6%) but way lower than 10.3% growth it achieved in 2011 or the over 9% growth rates in 2006 and 2007.


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