IMF Issues Optimistic Outlook For India’s Economy 2017

February 24, 2017
IMF Issues Optimistic Outlook For India’s Economy 2017 February 27, 2017 Clive Nelson

The International Monetary Fund (IMF) has stated that India’s growth would drop to 6.6 percent in fiscal 2016-17 as a result of the disruption caused by the demonetization. It has however said that this setback was temporary in nature and the country would return to the expected growth of over eight percent in following years.

The global financial institution released its annual country report on India earlier this week where it assessed the nation’s economic prospects. The surprise Nov. 8 demonetization announcement caused widespread cash shortages and payment issues as it removed nearly 86 percent of cash from the Indian economy overnight.

Consumption and business activity were hit which the IMF has said was proving to be a challenge in sustaining the country’s growth momentum


In a statement the IMF said,

Growth is projected to slow to 6.6 per cent 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

India grew at 7.6 percent in the financial year of 2015-16.

Although expressing support for measures to eliminate illegal cash from the economy, the IMF called for quick restoration of cash in the system and for taking steps to avoid any further payment disruptions. Paul Cashin, the IMF mission chief for India called the Indian economy the brightest spot in the global landscape despite disruptions from the demonetization drive.

Listing the factors driving growth, the IMF said that the last stages of a favourable monsoon, strong consumer confidence, low oil prices and progress in addressing supply-side impediments had helped the economy. The IMF Executive Directors also lauded steps taken by the government towards fiscal consolidation and the adoption of an anti-inflationary monetary policy which has boosted stability.

Cashin pointed out that the upcoming implementation of the goods and services tax (GST) policy is likely to push growth in India above 8 percent. He stated that the new tax regime will increase the efficiency of production as well as movement of products across the country. According to Cashin, the health of the banking industry however remained a concern.

The high levels of bad debts and corporate exposures were worrying factors. He also warned that loan repayments would need to be tracked carefully particularly in light of disturbances due to demonetization. The IMF has recommended continued caution against potential shocks, both domestic and global and urged more reforms to improve economic output , job creation and inclusive growth.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

Related Articles

ECB Trims Eurozone Economic Outlook

On Thursday, the European Central Bank axed the growth and inflation target of the euro area, citing constant uncertainties, primarily

Goldman Sachs – Euro to Strengthen Against the Swiss Franc

The Swiss franc has regained the lost ground against the greenback, the euro and the pound in the first-quarter, even

Nokia sees poor demand for telecom equipment in FY18

Due to technology transition, heavy competition from China, and operator consolidation in some countries, the erstwhile mobile handset manufacturer, Nokia