Vaibhavi Khanwalkar gets in conversation with Moneycotrol's Deputy Executive Editor, Ravi Krishnan to find out the possible implications of the rate cut.
In a speech ahead of next week's spring meetings in Washington with the World Bank, IMF chief Christine Lagarde said the world economy was vulnerable to shocks from Brexit, high debt levels and trade tensions, as well as unease on financial markets.
China is the world's largest trading nation, and the extent of the declines will be closely watched by international investors and policymakers as anxiety grows over cooling global demand.
"At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead," World Bank Chief Executive Officer Kristalina Georgieva said in the semi-annual Global Economic Prospects report.
In a statement at the end of three days of meetings, the International Monetary and Finance Committee (IMFC), heeding the voice of countries like India, the US, Britain and France, called on the IMF and the World Bank to work on a multi-pronged programme to enhance debt transparency and sustainability.
"This judgement reflects our view that monetary policy remains accommodative. Ongoing job gains should continue to support the growth of incomes and, therefore, consumer spending.
The study also warns of a continued slowdown in global growth over the coming decade. India and Uganda top the list of the fastest growing economies to 2025, at 7.7 per cent annually.
International Monetary Fund Managing Director Christine Lagarde said that the global economy has reached a turning point, even though uncertainties remain.
US dollar is strengthening and global growth is also picking up. Does this spell bad news for Indian market. Global analyst Geoff Lewis says emerging markets will have a good year and India will be a favourable destination for investors.
With the sell-off and outflows in emerging markets following US elections and dollar strengthening, valuations have become interesting again, says Lucy MacDonald, Chief Investment Officer, Allianz Global Investors.
The United Nations expects global economic growth to rise to 2.7 percent this year and 2.9 percent in 2018, up from 2.2 percent in 2016, and said Brexit and U.S. President-elect Donald Trump's tax policies could have adverse effects.
China's President, Xi Jinping, has said that economic globalization has powered global growth and should not be blamed for the world's problems.
India grew fastest among major economies worldwide at over 7.5 percent in 2016 and will continue to drive global growth in 2017 with its share in the world GDP expected to rise to 17 percent, a study said today.
In an encouraging sign, the World Bank today projected a global growth of 2.7 per cent in 2017, even as it observed that stagnant global trade, subdued investment and heightened policy uncertainty marked another difficult year for the world economy.
That means using all policy tools monetary, fiscal, and structural: to maximise the synergies within countries and amplify the impact though coordination across countries," she said at the annual fall meetings of the IMF and the World Bank here yesterday.
Strong public investment in roads, railways and inland waterways, and the boost to spending from the 7th Pay Commission‘s award, should improve industrial outlook.
Global growth will motor along but the recovery will be gradual and uneven with heightened uncertainty, even as the United States, the world's biggest economy, is expected to recover, the ECB said in a regular economic bulletin.
"India has edged out China as the world's fastest-growing large economy, despite a slowdown in global growth and tough times for many emerging markets. However, this outperformance could prove temporary if India's reforms do not gather greater momentum," the US-based agency said in a statement.
Chinese technology major Lenovo is betting on India to contribute significantly to its global growth even as smartphone sales slow down in its home market
"Taking into account country-specific circumstances, we commit to strengthening our economic policy responses in a cooperative manner and to employing a more forceful and balanced policy mix, in order to swiftly achieve a strong, sustainable and balanced growth pattern.
"A favourable monsoon after a gap of two years would have a mixed impact on trade in various sectors, boosting agricultural exports and limiting imports of crude oil and coal while enhancing the demand for gold," domestic ratings agency Icra said.
Despite the past success, the global economy remains sharply divided into two distinct zones. The developed economies of Europe and Japan are struggling to come out of economic stagnation.
Fresh financial shocks could impact emerging markets, says IMF's Chief Economist Maurice Obstfeld.
Ian Hui, Global market strategist at JP Morgan Asset Management expects less than four rate hikes in 2016 by the Fed.
On China, Aury Obstfeld, Chief Economist, IMF says the quality of growth is as import as the quanity of growth.