International Monetary Fund (IMF) has said that India's economic growth outlook has improved as the impact of government's demonetisation drive to curb black money seems to be fading and recent key structural reforms are paying off. Though, it also noted that concerns are growing on corporate debt and banking system vulnerabilities.
IMF has stated that there is 'cautious optimism' about the global economy but policy efforts are still required to reinforce the recovery. It pointed out that the global recovery continues, even as the composition of growth is shifting among the large economies. It also expects that global growth to be around 3.5 percent this year and next. Even though global growth momentum remains on track, the IMF has said that some of the forces driving the recovery are adding to already high vulnerabilities and external imbalances. At the same time, it also noted that, weak productivity growth and a lack of inclusiveness limit the growth outlook going forward. It added that other downside risks include an abrupt adjustment of financial vulnerabilities and the risk of anti- globalisation sentiment feeding into inward-looking policies.
Noting that there is scope for improving productivity and widening economic opportunities for all, the IMF said that in many emerging and advanced economies, higher investment in education, including through better use of public funds, would support long term growth. It also explained that such investments would also help in opening up opportunities and enabling both social mobility and adjustment to structural economic shifts, including those arising from technology and trade.