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23
February 2017
India's
GDP growth during the current fiscal ending March has been estimated by the
International Monetary Fund to slow down to 6.6 per cent due to the temporary
disruptions caused by the government's demonetisation drive, the multilateral
lender said on Wednesday. The Total
Investment & Insurance Solutions
"Growth
is projected to slow to 6.6% in FY2016/17, then rebound to 7.2 per cent in
FY2017/18, due to temporary disruptions, primarily to private consumption, caused
by cash shortages," the IMF said in its latest annual country report on
India. The Total Investment & Insurance
Solutions
"A
key domestic risk stems from the government's currency exchange initiative,
where the near-term adverse economic impact of accompanying cash shortages
remains difficult to gauge, while it may have a positive economic impact in the
medium term," the report said.
The
report called for "action to quickly restore the availability of cash to
avoid further payment disruptions and encouraged prudent monitoring of the
potential side-effects of the initiative on financial stability and
growth". The Total Investment & Insurance
Solutions
The
IMF also said that a favourable monsoon, low oil prices, continued progress in
resolving supply-side bottlenecks and robust consumer confidence will support
near-term growth as cash shortages ease. The
Total Investment & Insurance Solutions
However,
India's investment recovery is expected to remain modest and uneven across
sectors, as corporate de-leveraging takes place and industrial capacity
utilisation picks up, the report said.
From
the external perspective, it said that despite the reduced imbalances and
stronger reserve buffers, the impact from global financial market volatility
could be disruptive, including from US monetary policy normalization or
weaker-than-expected global growth.
According
to IMF, domestic risks also emanate from a potential deterioration of corporate
and state-run bank balance sheets, as well as setbacks in the reform process,
including in the design and implementation of the proposed Goods and Services
Tax (GST).The Total Investment & Insurance
Solutions
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