International Monetary Fund (IMF) in its latest release of the World Economic Outlook (WEO) slashed the economic growth projection of India to 5.7% for the calendar year 2013, from its earlier prediction of 5.9%.
IMF slashed the global outlook to 3.3% from 3.5% predicted in January 2013 and for 17-nation Euro Zone, the forecast was 0.3%.
IMF expects India to grow 6.2% in 2014 and global economy to expand 4.1% in 2014.
The World Economic Outlook (WEO) is a periodic survey released by The International Monetary Fund (IMF).
Why IMF slashed its economic growth projection for India?
- Owing to the substantial structural challenges faced by India, which would lower potential output over the medium term and and also keep inflation elevated by regional standards.
Indian Govt. has projected India’s economic growth at 6.2-6.7% in 2013-14, while the ADB (Asian Development Bank) recently projected Indian economic growth at 6% during 2013-14.
Why there is a difference in Economic growth projections for India by IMF and India’s national accounts?
- IMF takes GDP at Market Prices and follows a calendar year.
- India’s national accounts takes Factor Cost and follows April to March year.
- Thus, some adjustments are required when the two are compared.