The International Monetary Fund (IMF) today retained India's growth outlook at 7.3 per cent for the current fiscal and 7.5 per cent in the next two even as it lowered the world projection on slumping oil and commodity prices.
IMF's projection of 7.3 per cent is within the government's estimate of 7-7.5 per cent expansion this financial year ending March.
In a quarterly update to its World Economic Outlook, IMF said the global economy will expand 3.4 per cent in 2016, down from an earlier estimated 3.6 per cent in October. It also trimmed its forecast for growth in 2017 to 3.6 per cent, down from 3.8 per cent three months ago.
"India and the rest of emerging Asia are generally projected to continue growing at a robust pace, with some countries facing strong headwinds from China's economic rebalancing and global manufacturing weakness," IMF said.
IMF warned of substantial risks to global growth from a slower Chinese expansion, a stronger US dollar, collapsed oil prices and political turmoil wreaking havoc on struggling economies like Russia and Brazil and across the Middle-East.
It estimated that the global economy grew 3.1 per cent in 2015, the weakest pace since the 2009 recession. Growth in emerging markets and developing nations slowed for the fifth straight year.
IMF said while the advanced economies will anchor world economic expansion in 2016, emerging-market slowdown, China's shift to growth driven less by exports and manufacturing and US Federal Reserve's gradual exit from ultra-low interest rates pose risks to the global outlook.
IMF said China's growth would slow from 6.9 per cent in 2015 to 6.3 per cent in 2016 and go down further to 6 per cent in 2017.
It said the sharp collapse in the price of oil is proving more of a drag on the global economy than a stimulus.
Financial strains on oil exporters led by Saudi Arabia and deep cuts in investment in the industry more than offset the expected gains from cheap oil enjoyed by key importers like Japan and the United States.
Maury Obtsfeld, Director of IMF's research department, said fundamentals "seem to point to a low-for-long scenario for oil".
"With Iranian oil, resilience in the shale extraction
industry in the US and the possibility of shale extraction elsewhere, it's hard to see oil going back to the USD 100 a barrel level anytime soon," Obtsfeld said.
For India, it retained the growth forecast at 7.3 per cent for the current fiscal and 7.5 per cent for 2016-17 and 2017-18.
"Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China's rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States," IMF added.
"If these key challenges are not successfully managed, global growth could be derailed," it cautioned.
IMF said the pick-up in global activity is projected to be more gradual than in the October WEO, especially in emerging market and developing economies.
Emerging market and developing economies account for over 70 per cent of the global growth.
IMF projected advanced economies' growth to rise by 0.2 percentage point in 2016 to 2.1 per cent and hold steady in 2017.
Growth in emerging market and developing economies is projected to increase from 4 per cent in 2015 - the lowest since the 2008-09 financial crisis - to 4.3 per cent and 4.7 per cent in 2016 and 2017, respectively.
