As Europe struggles to contain the Greece sovereign debt crisis, the International Monetary Fund (IMF) has today warned of a temporary slowdown in global economic activities. It, however, has not lowered its 2011 and 2012 growth projections for India.
IMF also pointed out that global inflation picked up from 3.25 per cent in the last quarter of 2010 to 4 per cent in the first quarter of 2011 due to a higher-than-expected increase in commodity prices. However, core inflation also crept up across a number of economies, it said in its update on the World Economic Outlook.
Among emerging and developing economies, inflation pressures have become increasingly broad-based, reflecting a higher share of food and fuel in consumption as well as accelerating demand pressure.
“The global expansion remains unbalanced. Growth in many advanced economies is still weak, considering the depth of the recession. In addition, the mild slowdown observed in the second quarter of 2011 is not reassuring,” IMF said.
However, the report said growth in most emerging and developing economies continues to be strong.
It kept economic growth forecast for India at 8.2 per cent for 2011 and 7.8 per cent for 2012, same as it has said in its April report. However, these figures are not comparable with those of the Government of India, since IMF uses demand-side method to estimate growth (GDP at market price), while India uses GDP at factor cost.
India estimated its economy to grow in the range of 8-8.5 per cent this financial year, against 8.5 per cent in the previous one. This is lower than the earlier projection of 9 per cent growth.
Overall, the global economy expanded at an annualised rate of 4.3 per cent in the first quarter (of 2011), and forecasts for 2011-12 are broadly unchanged, with offsetting changes across various economies.
