Going forward, greater vigilance is required, especially on the policy front, to ensure that if the global environment takes a turn for the worse, the Indian economy can withstand that shock.
The International Monetary Fund’s latest review of the global economy and financial stability paints a rather somber picture of the future. The World Economic Outlook maintains that expansion seen since mid-2016 would continue this year and the next, but also warns of growth becoming less balanced and rising downside risks.
The global economy is expected to clock 3.7 percent growth in 2018 and 2019, which itself is little lower than the IMF’s April assessment. Rising trade tensions, reversal of capital flows from emerging markets, tightening financial conditions led by the US Federal Reserve and overall policy uncertainty are key risks.
The Global Financial Stability Report (GSFR) further cautions about heightened near term risks to financial stability on worsening external financial conditions and trade tensions with elevated medium term risks from high global debt levels and stretched asset valuations.
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