IMF's World Economic Outlook highlights emerging economies in lead

The International Monetary Fund, in its World Economic Outlook on Monday highlighted a pattern of surge in growth rate among the emerging economies, while the likes of the United States of America and United Kingdom are witnessing a slowdown.

In the last quarterly update of its report, which was released earlier in Kuala Lampur, the IMF, while retaining its global growth projections, highlighted a wavering distribution of global growth.

In its report, the IMF highlighted a global growth rate of 3.5 percent for this year, which is projected to increase to 3.5 percent in 2018.

The growth rate of the US for this year is projected at 2.1 percent, with the same being consistent during the next year as well.

With regards to the United Kingdom, the IMF highlighted a decline in growth rate, from 1.7 percent in the current year to 1.5 percent in 2018, in lieu of the political turmoil stirred due to the Brexit and other factors, reports Bloomberg.

This being the situation of the larger economies, the onus of sustaining global growth recovery is witnessing a shift towards emerging economies like China, Canada, Japan and so on.

Earlier in April, owing to the impact of the demonetisation drive which was rolled out by the Prime Minister Narendra Modi led-government on November 9 2016, the IMF had trimmed India's annual growth forecast by 0.4 percentage points to 7.2 per cent for 2017.

The temporary negative consumption shock induced by cash shortages and payment disruptions from the recent currency exchange initiative resulted in a modification of the forecasted rate from 7.6 to 7.2 percent.

However, the IMF projects a growth rate of 7.7 percent for 2018, thus projecting a significant increase against the backdrop of ongoing economic reforms in the country.

By 2022, the IMF estimates global growth to rise to 3.8 per cent, led by developments in the emerging market and developing economies, where growth is projected to increase to five per cent by the end of the forecast period.

"This forecast assumes continued strengthening of growth in commodity exporters; an acceleration of activity in India resulting from the implementation of important structural reforms; and a successful rebalancing of China's economy to lower, but still high, trend growth rates," said the report.

However, the IMF has also listed further reforms that India must undertake, including replacing the demonetised currency and reducing labor and product market rigidities to ease firm entry and exit, expand the manufacturing base, and gainfully employ the abundant pool of labor.