New Delhi, Oct 8 (KNN) Even though India is not as open as China, it is still an open economy, said Gian Maria Milesi-Ferretti, Deputy Director, Research Department, IMF adding that when external demand weakens, Indian exports tend to suffer.
 
The International Monetary Fund (IMF) had marginally lowered India’s growth rate from the previous 7.5 per cent to 7.3 per cent this year due to a difficult external environment.
 
During the conference on the World Economic Outlook (WEO), Milesi-Ferretti was asked, “You lowered India’s growth forecast marginally. What is the reason for this? Given that India is a net commodity importer, what kind of an impact do you see on India?”
 
Responding to the question, he said, “We have a more difficult external environment in general, with a slowdown in growth relative to last year. Even though India is not as open as China, it is still an open economy. Hence, when external demand weakens, Indian exports tend to suffer.
 
That is the negative force that pushes down our growth forecast for India. Of course, on the positive side, some of the external developments have been more favorable. In particular, as you rightly emphasized, the decline in commodity prices is good for commodity-importing countries like India. It also helps bring down inflation,” he added.
 
“So, the domestic demand component of growth in India looks resilient and strong, but because of the decline in external demand, the export outlook is a bit less rosy than we would have liked and that we were forecasting a few minutes ago. That is the reason,” he said. (KNN Bureau)