Hamburg (Oct. 8, 2013). The International Monetary Fund (IMF) released yesterday new World Economic Outlook (WEO), which sees slowdown in economic growth for most major econmies this year. On a positive note it expects the growth to resume an upward trend in the next year. The Executive Summary states:
„Global growth is in low gear, the drivers of activity are changing, and downside risks persist. China and a growing number of emerging market economies are coming off cyclical peaks. Their growth rates are projected to remain much above those of the advanced economies but below the elevated levels seen in recent years, for both cyclical and structural reasons.“
As far as India is concerned, India is amongst the only few countries that are expected to grow on a year-on-year basis on a higher rate in 2013 (3.8%) than in the previous one (3.2%). For 2014, IMF expects India to grow by 5.1%. There is also a note of caution while interpreting these figures. IMF (footnote 2, page 63) explicitly states:
„Note that, in accordance with international standards, growth for India is presented [..] for GDP at market prices. In terms of GDP at factor cost, growth is estimated to be 5 percent in fiscal year 2012 and is projected at 4¼ percent in 2013 and about 5 percent in 2014.“
IMF economists see India „faced with persistent supply-side constraints“ and calls for „strengthening public finances and implementing structural reforms“.
Table 1: IMF's World Economic Outlook Projections in %.(Oct. 2013)
Both this and next year growth in global output is propelled by the group of „emerging market and developing economies“, that outperforms the growth projection for the advanced economies. Despite its slowed growth India too is expected to outperform the average growth in world output, see Table 1. Interestingly, IMF sees Chinese economy as an exception which continues to grow much more strongly than the most other major economies, but is seen to be slowly losing steam over this time period.
This summary has been compiled by Rajnish Tiwari