The International Monetary Fund (IMF)in its latest report on World Economic Outlook downgraded economic growth forecasts for China, India and other Asian developing countries. The downgrading of economic growth was mainly due to sluggish global recovery and slowing down of investments.
IMF has forecasted the Indian economy will grow at 7.5 to 7.75 percent in this fiscal year compared to 8.5 percent in 2010-11. This economic growth is expected mainly on account of private consumption.
In India Despite several rate hikes by RBI the credit growth is strong but the major challenge is inflation.According to IMF, China’s economy is expected to grow by 9.5 per cent in 2011 and 9 per cent in the year 2012 which is lower from its June forecast of 9.6 percent in 2011 and 9.5 percent for 2012.
The global economy had weakened and business activity seems to be gloomy. According to IMF forecast there will be a moderate growth in the global economy of around 4 percent in 2012 compared to 5 percent in the year 2011. The major challenge for the policymakers is to curtain price inflation which has been ruining in double digits figures from quite some time.In the 4 newly industrialized economies of Asia – Taiwan, Hong Kong, South Korea, and Singapore the economic growth will slow down from 4.7 percent in 2011 to 4.5 percent in 2012 from an 8.4 percent growth in 2010.
According to the IMF report the investment is expected to stay sluggish also because of corporate governance issues, the prevailing global uncertainty and unfavourable external financing issues.
“Bell the bull says: In India Despite several rate hikes by RBI the credit growth is strong but the major challenge is inflation.”