The International Monetary Fund (IMF) on Monday cut its 2012 GDP growth forecast for India sharply, to 4.9% from 6.1% estimated in July, and 6.8% in April.
In its update to the World Economic Outlook, the IMF has cited “continued investment slowdown” and further deterioration in the global economy as the main drivers behind the downgrade.
The outlook for India could worsen, unless European and US policymakers deal proactively with their daunting economic challenges, the IMF warned.
India’s growth could rebound to 6% in 2013 on the back of recent reform measures coupled with “improvement in the external conditions”. In its July outlook, the IMF had estimated India’s 2013 GDP growth at 6.6%.
In the World Economic Outlook report, the IMF has cut its projection for the world economic growth in 2012, to 3.3% from 3.5% predicted in July.
The failure of US and eurozone policy makers to tackle their fiscal woes is threatening an already “slow and bumpy” global economic recovery, the IMF said.