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Red Ahead : IMF warns greater turbulence for Indian economy

The International Monetary Fund has forecast rough times ahead for Indian economy, in its latest review of global financial scenario.

The review titled World Economic Outlook maintains that expansion seen sinceĀ  mid-2016 will continue this year and the next, but warns of growth becoming less balanced and rising downside risks.

Key risks for 2018- 19 is listed as rising trade tension, reversals of capital flows from emerging markets, tightening financial conditions led by US Federal Reserve and overall policy uncertainty.

According to the review, the global economy is expected to register 3.7 percent growth in 2018 and 2019.

The report expresses concerns about resilience and credibility of emerging markets, which it warns could trigger more capital outflows and lead to sharp asset market corrections.

Indian market is already reeling under tightening global liquidity and capital flow reversal though some steps have been taken to address that vulnerability.

The rupee presently stands depreciated over 13 percent against dollar and by over 11 percent against ta basket of currencies(based on RBI’s 36-country trade weighted REER index).

Also the country’s trade deficit in July – Sept widened to $49.4 billion from previous $ 45 billion.

Govt’s flagship GST collections are running below their monthly target or Rs 1 lakh crore and could lead too overall shortfall in taxes

In short the situation at present calls for greater vigilance on the policy front, the review warns India.

 

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