IMF lowers India growth rate due to external environment

The IMF on Tuesday forecast a lower global growth of 3.1 per cent this year citing modest pickup in advanced economies and a slowdown in emerging markets, primarily reflecting weakness in some large developing nations and oil-exporting countries.

“The distribution of risks to global growth remains tilted to the downside”, the fund said.

China having unrolled fiscal measures and its infrastructure investments are the main reasons for the economic growth this year, according to the report.

The IMF said that “recent market developments such as slumping commodity prices, China’s bursting equity bubble and pressure on exchange rates” underscored the challenges faced by emerging markets, many of which are commodity exporters.

Meanwhile, a much sharper cut in growth projection for China means India will remain the fastest growing major economy in the world.

For most other countries the prediction was slashed, with Japan down 0.2 percentage points to 0.6 percent and Germany down 0.1 percentage points to 1.5 percent.

Report: The International Monetary Fund (IMF) projected that South Korea’s economy will post growth of two-point-seven percent this year.

As regards the consumer prices in Bulgaria, deflation of 0.8 % is forecasted in 2015, which is expected to turn into inflation of 0.6 % in 2016.

In contrast, the IMF predicted Ivory Coast, Democratic Republic of the Congo, Ethiopia, Mozambique and Tanzania would record growth of seven percent or more this year and next. But advanced economies should expect a slowdown in exports because of weakening demand in emerging-market economies. Falling commodity prices, depreciating emerging market currencies and on-going financial volatility have each hampered growth in this area and will continue to do so late into the year. Though the IMF is still predicting growth, it made it clear “the growth is distinctly lacklustre”, especially for the current year.

The U.S. Federal Reserve has indicated it will raise interest rates before the end of this year after keeping them at near-zero since the Great Recession.

The prospect of rising US interest rates and a stronger dollar has already contributed to higher financing costs for some borrowers, including emerging and developing economies, ‘ the IMF explained.