The International Monetary Fund forecast India will grow at 5.7% in 2013 and 6.2% in 2014, from 4% witnessed in 2012.
The projections were trimmed marginally (0.1-0.2%) from what was estimated earlier. The report cautioned that slowdown in capital accumulation will likely lower the potential output in the medium term. This means India may not be able to go back to 8% growth rate in the medium term.
"We expect growth accelerating from 4% to 5.7% in 2013 towards 7% over medium term," said Jorg Decressin, deputy director, research development, International Monetary Fund (IMF).
"So what needs to be done is improving supply side of the economy through various reforms like infrastructure, power, transportation, labour skills."
He said inflation has proven stickier than expected. The report expects consumer inflation in India to be at 10.8% and 10.7% in 2013 and 2014 respectively.
Supply-side issues coupled with policy uncertainty and regulatory obstacles have contributed to the recent stalling of investment in India.
The report said that the main macroeconomic policy challenge in emerging market and developing economies is to recaliberate policy settings to avoid overstimulation and rebuild macroeconomic policy buffers.
The report pointed out the fiscal policies in many emerging economies continues to be accommodative. Also, policy makers must carefully consider the risks of policies falling behind the curve.
The downward revision in growth projections is across most advanced, emerging market and developing economies.
Uncertainty in Cyprus and Italy and other vulnerabilities in the euro zone pose short term risks to growth. The report paints a cautiously optimistic picture of the world economy. It said that activity has stabilized in advanced economies and has picked up in emerging market and developing economies, supported by policies and renewed confidence.
No comments:
Post a Comment