India’s growth to rebound as cash shortage eases: IMF

Asian economies are expected to grow by 5.5% in 2017, slightly more than last year

GN Bureau | May 9, 2017


#IMF   #Economy   #Growth   #India   #GDP  
Representational illustration (Ashish Asthana)
Representational illustration (Ashish Asthana)

India’s growth is expected to rebound to 7.2 percent in FY 2017-18 as the cash shortages accompanying the currency exchange initiative ease, said an International Monetary Fund report that was released on Tuesday.

The Regional Economic Outlook for Asia and the Pacific estimates growth for the region to increase this year to 5.5 percent from 5.3 percent in 2016. Growth will remain strong at 5.4 percent in 2018, as the region continues to be the leader of global growth.

The report also cites the more favourable global environment with growth accelerating in many major advanced and emerging market economies—notably the US and commodity exporters—as supporting Asia’s positive outlook. Risk appetite remains strong in global financial markets despite some bouts of capital flow volatility in late 2016.

“The signs of growth in the region are encouraging so far. The policy challenge now is to strengthen and sustain this momentum,” said Changyong Rhee, director of the IMF’s Asia and Pacific Department.

The report said that in China, the region’s biggest and the world’s second largest economy, policy stimulus is expected to keep supporting demand. Although still robust with 2017 first quarter growth slightly stronger than expected, growth is projected to decelerate to 6.6 percent in 2017 and 6.2 in 2018.

This slowdown is predicated on a cooling housing market, partly reflecting recent tightening measures, weaker wage and consumption growth, and a stable fiscal deficit.

Japan’s growth forecast for 2017 has been raised to 1.2 percent with support from expansionary fiscal policy and the postponement of the consumption tax hike (from April 2017 to October 2019). The expansion would slow down to 0.6 percent in 2018 as the boost from the fiscal stimulus wears off.

The outlook for other Asian economies is also positive, but with some exceptions. India’s growth is expected to rebound to 7.2 percent in FY 2017-18 as the cash shortages accompanying the currency exchange initiative ease.

In most of the Southeast Asian economies, growth is expected to accelerate somewhat, supported by robust domestic demand—an important driver of growth in these countries. Meanwhile, growth in Korea is projected to remain subdued at 2.7 percent this year despite the recent pick up in exports, mainly owing to weak consumption.

It noted that the region’s outlook, however, is clouded with uncertainty. On the plus side, larger-than-expected fiscal stimulus in the US or stronger business and consumer confidence in advanced economies could provide a further boost to Asia’s exports and growth. Reforms, such as productive public investment in infrastructure in ASEAN and South Asian economies, could help prolong the positive momentum.

Asian economies are especially vulnerable to protectionism because of their trade openness and integration to global value chains. A global shift toward inward-looking policies could suppress Asia’s exports and reduce foreign direct investment to Asia. Furthermore, a bumpier-than-expected transition in China or geopolitical tensions in the region could also weaken near-term growth.

Comments

 

Other News

Ordinances promulgated to boost agriculture

 After the announcement of the decisions by the government for reforms in the agricultural sector for raising the income of the farmers as part of the ‘Aatmanirbhar Bharat Abhiyan, the president has promulgated two ordinances with the aim of giving a boost to rural India for farmers engaged in a

How Covid-19 can be a boon to slash tobacco disease burden

 The two-month Covid-19 lockdown has been both a bane and a boon for India’s 27 crore tobacco users. With tobacco not included in the list of essential goods and many states explicitly banning chewing tobacco over concerns of spitting, the sharp drop in availability has forced them to undergo wi

Maharshtra braces to face Cyclone Nisarga

 Even as Mumbai fights challenges posed by COVID-19 on multiple fronts and as the  coronavirus cases continue to rise daily, the city now faces a double whammy with the cyclone ‘Nisarga’ slated to make the landfall in Maharashtra Wednesday. A state-wide alert has been issued for Mumba

Harnessing the demographic capital: how effective are skilling programmes?

Probing data concerning increased job creation and the decline in unemployment has been holding the attention of economists and been subject of discussions in several think tanks in the preceding months. The NITI Aayog reports that 3.53 million new jobs were created between September 2017 and February 2018

It`s time to Unlock now, with economic focus

With Lockdown 4 ending Sunday, the home ministry has issued new guidelines to fight COVID-19 and for phased re-opening of areas outside the Containment Zones. The guidelines, issued based on extensive consultations held with states and UTs, will be effective from June 1 till June 30. The first phase of reo

Small kitchen gardens turn saviours for Gujarat tribal families

When the whole world is fighting COVID-19, food and nutrition security has become a major issue. The pandemic has aggravated the existing food crisis in India, especially in rural and tribal regions. There has been less availability of fresh foods in most parts of the country, and the tribal community has



Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter