Emerging worries

IMF now expects the global economy to expand at 3.4% in 2016, 0.2 percentage point lower than its October forecast


After a bumpy beginning to the year for financial markets, the International Monetary Fund has added to the gloom with a downward revision in its global growth projection. It now expects the world economy to expand at 3.4% in 2016, 0.2 percentage point lower than its October forecast. While the developed world continues to grow at a modest pace, it’s the emerging markets that are facing greater challenges.

Risks to growth are on the downside because of current adjustments in the global economy, such as lower commodity prices and economic rebalancing in China.

However, in this churn and volatility, India, thankfully, remains relatively better placed. The fund expects the South Asian nation to grow at 7.5% in 2016.

The challenge now will be to manage the spillover effects of these global adjustments, both in the financial market and the real economy.