World Economic Outlook: Growth in India to Pick up Further

The WEO predictions were in favour of a strong growth in the global economy as well.

Author: Vaibhav Tiwari

Published: July 24, 2017, 10:31 AM IST

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https://www.india.com/business/world-economic-outlook-growth-in-india-to-pick-up-further-2345043/ Copy

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New Delhi, July 24: The World Economic Outlook (WEO) report for July 2017, published by the International Monetary Forum (IMF), has predicted that India will register a robust growth in fiscal years 2017 and 2018. The report said that India’s growth will be better than last year’s in the coming two fiscals.

Talking about demonetisation, the WEO document said that economic activity slowed in 2016, but due to governmental spendings, the yearly growth turned out to be better than expected.

“Growth in India is forecast to pick up further in 2017 and 2018, in line with the April 2017 forecast. While activity slowed following the currency exchange initiative, growth for 2016––at 7.1 percent––was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year,” the report read.

The WEO predictions were in favour of a strong growth in the global economy as well. It said that the pickup in global growth has remained on track. The global output will grow by 3.5 per cent in 2017 and 3.6 per cent in 2018.

“Global growth for 2016 is now estimated at 3.2 percent, slightly stronger than the April 2017 forecast, primarily reflecting much higher growth in Iran and stronger activity in India following national accounts revisions. Economic activity in both advanced economies and emerging and developing economies is forecast to accelerate in 2017, to 2 percent and 4.6 percent respectively, with global growth projected to be 3.5 percent, unchanged from the April forecast. The growth forecast for 2018 is 1.9 percent for advanced economies, 0.1 percentage point below the April 2017 WEO, and 4.8 percent for emerging and developing economies, the same as in the spring. The 2018 global growth forecast is unchanged at 3.6 percent. The revisions reflect primarily the macroeconomic implications of changes in policy assumptions for the world’s two largest economies, the United States and China,” the report said further.

How advanced economies will do

• The growth forecast in the United States has been revised down from 2.3 percent to 2.1 percent in 2017 and from 2.5 percent to 2.1 percent in 2018.
• The growth forecast has also been revised down for the United Kingdom for 2017 on weaker-than-expected activity in the first quarter.
• By contrast, growth projections for 2017 have been revised up for many euro area countries, including France, Germany, Italy, and Spain, where growth for the first quarter of 2017 was generally above expectations.
• The growth forecast for 2017 was also revised up for Canada, where buoyant domestic demand boosted first-quarter growth to 3.7 percent and indicators suggest resilient second-quarter activity, and marginally for Japan, where private consumption, investment, and exports supported first-quarter growth.

Developing economy

• China’s growth is expected to remain at 6.7 percent in 2017, the same level as in 2016, and to decline only modestly in 2018 to 6.4 percent. The forecast for 2017 was revised up by 0.1 percentage point.
• After contracting in 2016, economic activity in Latin America is projected to recover gradually in 2017–18 as a few countries––including Argentina and Brazil—exit their recessions.