Economic slowdown reflects an investment in India’s future: 

Economic slowdown reflects an investment in India’s future: 

Context

• India’s economic growth for 2017 and 2018 will be slower than earlier projections, the International Monetary Fund (IMF) said in its latest World Economic Outlook.

About IMF

• The International Monetary Fund (IMF) is an organization of 189 countries,Created in 1945 working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
• The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods, New Hampshire, United States, in July 1944.
• The IMF’s primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.

World economic outlook report

• The World Economic Outlook (WEO) is a survey conducted and published by the International Monetary Fund.
• It is published biannually and partly updated two times a year.
• It portrays the world economy in the near and medium context, with projections for up to four years into the future. WEO forecasts include key macroeconomic indicators, such as GDP, inflation, current account and fiscal balance.

World Economic Outlook, October 2017

• Theme: Seeking Sustainable Growth: Short-Term Recovery, Long-Term Challenges
• The global upswing in economic activity is strengthening, with global growth projected to rise to 3.6 percent in 2017 and 3.7 percent in 2018.
• The IMF projected India to grow at 6.7% in 2017 and 7.4% in 2018, which are 0.5 and 0.3 percentage points less than the projections earlier this year, respectively.  

Reason for the decline in growth forecast

• The implementation of a nationwide GST reform.
• Demonetisation
• Fall in exports especially merchandise
• Loss of jobs in Services sector
• Increased Protectionism worldwide

Conclusion

• In a democracy this large, attempting reforms on this scale, there were always going to be compromises and some operational sticking points. Better to address sooner than later.
• The IMF  looks forward to a re-acceleration of growth after these blips related to the tax reform, saying it is “among several key structural reforms under implementation that are expected to help push growth above 8 percent in the medium term.