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India is the only country in the BRICS grouping that has avoided a growth downgrade by IMF as it retained the country’s economic expansion forecast at 5.4 per cent for the current fiscal.
The latest World Economic Outlook by IMF retained the growth projection at 5.4 per cent in 2014-15, while for the next fiscal it has maintained a stronger growth rate at 6.4 per cent.
The BRICS grouping comprises of Brazil, Russia, India, China and South Africa. While Russia is expected to grow at 0.9 per cent, a downgrade by 1.1 per cent, for China it is 7.4 per cent down by 0.2 per cent for 2014.
In case of Brazil, the growth forecast has been cut by 0.6 per cent to 1.3 per cent and for South Africa by similar quantum to 1.7 per cent.
Recently, BRICS grouping decided to set up $100 billion New Development Bank for funding development activities and infrastructure in these countries.
“In India, growth appears to have bottomed out, and activity is projected to pick up gradually after the post-election recovery in business sentiment, offsetting the effect of an unfavourable monsoon on agricultural growth. In a number of major emerging market economies, growth projections for 2014-15 have been marked down,” IMF said. India recorded a growth of 4.7 per cent for the fiscal ended March 2014.
As far as global growth is concerned it has been marked down by 0.3 per cent to 3.4 per cent, reflecting both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets.
“With somewhat stronger growth expected in some advanced economies next year, the global growth projection for 2015 remains at 4 per cent,” IMF said.
Global growth is expected to rebound from the second quarter of 2014, as some of the drivers underlying first quarter weakness, such as the inventory correction in the United States, should have only temporary effects, and others should be offset by policies, including in China, it said.
Downside risks remain a concern, it said, adding that the increased geopolitical risks could lead to sharply higher oil prices.
Financial market risks include higher-than-expected US long-term rates and a reversal of recent risk spread and volatility compression, it said.
Global growth could be weaker for longer, given the lack of robust momentum in advanced economies despite very low interest rates and the easing of other brakes to the recovery, it said.
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