IMF – Latest Predictions

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International Monetary Fund
Source: AFP

The IMF said on Wednesday that emerging economies need to restructure their policies and monitoring mechanisms to ensure that they are not so dependent on global financial system shuffles.

According to IMF, the balance sheets are getting stretched thinner and the developing world is seeing an increase in stressed assets and bad debts. Increasing exchange rate flexibility, foreign reserves, inviting FDI and external financing of domestic currency have helped some of the countries to reduce their susceptibility to financial swings, but not enough.

IMF said that they need to adapt their policies to current events including weak factory growth in China and the reducing fuel prices to make the most of opportunities and mitigate the effect of global financial stress.

The IMF also released its World Economic Outlook, predicting a slow increase in growth rate for India, from 7.3% to 7.7%, till 2020. But its predictions for investment and savings rate are not so good. The report says that the investment rate in the country will fall in 2017 and rise up to 31.6% of GDP by 2020. The savings rate will fall even lower to 28.35% in 2018 and up to 28.6% in 2020. Neither of the two will match the rates of 2014. It has forecasted average inflation rates of 5.4%(2017), 5%(2018) and 4.94%(2020) for coming years.

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