IMF predicts bleak future for economic growth in India

IMF predicts bleak future for economic growth in India

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The International Monetary Fund (IMF), on October 9, 2012, caused concerns for some by predicting a bleak future for the Indian economy, which is currently the third largest in Asia. The IMF downgraded their predictions from a previous estimate of 6.1 percent to a 4.9 prediction in 2012.

Weak economic growth and a slowdown of foreign investment was cited as the main reasons for the uncertain outlook. Steve Brice, chief investment strategist at Standard Chartered Band told CNBC that if China’s 7.5 percent growth could be considered a hard landing, then India’s 5 percent growth could absolutely be considered a hard landing.

The Indian economy has been on a high for the last 3 years, clocking an average growth rate of 8.2 percent, after lifting itself from a sub 5 percent growth rate during the 2008 global financial crises. However, the gross domestic product (GDP) growth rate for the first half of this year has only shown 5.4 percent, a sharp decline from earlier years.

On the other hand, Asian Economics Research Director Robert Prior-Wandesforde, said that the IMF’s growth forecast for the sub continental giant was too bearish. According to Credit Suisse, India will manage a GDP growth of 5.7 percent in 2012 and up to 6 percent in 2013. He went on to mention that although GDP growth bottomed in March, it will continue to pick up in the coming quarters.