International Monetary Fund (IMF) has lowered India's growth projections for 2013 to 5.6% from the 5.8% it projected in April. In an update to its April World Economic Outlook, IMF said India’s growth would recover to 6.3% in 2014, which is marginally (0.1%) lower than its April forecast. The Indian economic growth slowed down to 5 percent in the previous fiscal, recorded as the slowest in 10 years, as high borrowing costs intended to douse inflation hurt corporate investment and consumer spending, and weak external demand curbed exports growth.
Further, IMF said that emerging market and developing economies are now expected to grow at a more moderate pace. The growth in emerging markets and developing economies would remain at 5 percent in 2013 and about 5.5 percent in 2014, which represent weaker prospects across all regions. By adding further, it said that many emerging market and developing economies face a trade-off between macroeconomic policies to support weak activity and to contain capital outflows and suggested that macroprudential and structural reforms can help make this trade-off less stark.
Referring to the global growth, IMF said that global growth will recover to above 3 percent in 2013 and 3.75 percent in 2014, which is 0.25 percent weaker for both years than the April 2013 projections. Weaker global demand, slower growth in several key emerging economies and protracted recession in the euro area are the main reasons for lowering the global growth from its earlier projection in April. IMF projected the US growth at1.75 percent for 2013 and 2.75 percent for 2014.
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