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IMF predicts 7.5 per cent growth rate for India in 2016

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Washington: The International Monetary Fund (IMF) has predicted that India’s growth is expected to strengthen from 7.3 per cent this year and last year to 7.5 per cent next year.

“Growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices,” the IMF said in latest World Economic Outlook (WEO) released on Tuesday ahead of the World Bank-IMF annual meetings in Lima (Peru).

The WEO foresees lower global growth rate compared to last year, with modest pickup in advanced economies and a slowing in emerging markets, primarily reflecting weakness in some large emerging economies and oil exporting countries.

Global real GDP grew at 3.4 per cent last year, and is forecast to grow at only 3.1 per cent this year. Growth is expected to rebound to 3.6 per cent next year and increase beyond 2016.

One of the key factors in this is the gradual increase in the global weight of fast-growing countries such as China and India, which further increases their importance as drivers of global growth, the WEO said.

In India, near-term growth prospects remain favorable, and the decrease in the current account deficit has lowered external vulnerabilities, it said.

Inflation is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.

The faster-than expected decline in inflation has created space for considering modest cuts in the nominal policy rate, IMF said.

But the real policy rate needs to remain tight for inflation to decline to the inflation target in the medium term, given upside risks to inflation, it said.

Continued fiscal consolidation is also essential, but it should be more growth friendly, WEO said suggesting tax reform and reduction in subsidies.

With balance sheet strains in the corporate and banking sectors, financial sector regulation should be enhanced, provisioning increased, and debt recovery strengthened, it suggested.

Structural reforms should focus on relaxing long-standing supply constraints in the energy, mining, and power sectors, WEO said.

Priorities include market-based pricing of natural resources to boost investment, addressing delays in the implementation of infrastructure projects, and improving policy frameworks in the power and mining sectors.

In advanced economies, growth is expected to remain robust and above trend through 2016 and contribute to narrowing the output gap.

The growth recovery in the euro area is projected to be broad-based. Growth prospects in emerging markets and developing economies vary across countries and regions.

But the outlook in 2015 is generally weakening, with growth for these economies as a group projected to decline from 4.6 per cent in 2014 to 4 per cent in 2015.

The WEO underscores that raising actual and potential output must remain the policy priority. This will require a combination of demand support and structural reforms, it said.

(Arun Kumar, IANS)

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Here’s Why Your Investment Strategy Should Not Be Based on Online Recommendations

There are some essential reasons why your investment strategy must not be based on online recommendations alone. Here’s why:

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Here's Why Your Investment Strategy Should Not Be Based on Online Recommendations
Here's Why Your Investment Strategy Should Not Be Based on Online Recommendations. Pixabay

An investment strategy is a plan of action taken by investors to guide their financial
decisions on the basis of their investment portfolios. A well-written and measurable
investment strategy is the key to success of every investor. Furthermore, with the
right professional recommendations, these strategies can offer more ways of
creating better financial security.

However, today, the human financial advisors have been replaced by online
recommendation systems, an intelligent information filtering platform that assists
investors to narrow their decision-making process. Online recommendations have
become an integral part of user experience in the investment sector.

Yet, the question still remains that even though online recommendations are
changing digital reality for investors, are they good for investment strategy? The
answer is No!

There are some essential reasons why your investment strategy must not be based
on online recommendations alone. Here’s why:

You're not talking to a real person
You’re not talking to a real person. Pixabay

#1 You Are Not Talking to A Real Person
Online recommendations systems follow a universal algorithm due to which users
are siloed into separate segments. It does not tailor your products according to your
needs.

The system only understands that you want to create a plan, but it does not consider
how would you like it to be and what factors are supposed to be taken into
consideration.

The ultimate drawback is that you are not talking to a person but being serviced by a
machine. This means the system lacks a two-way communication, thus restricting
users from making any changes.

On the contrary, in case of a financial advisor, you are talking to a living being, who
will listen to you about your needs, your goals, and present financial status. Based
on the conversation, the advisor will create a suitable plan for you, which if you do
not agree with, can be changed.

#2 Real-Time, Face-To-Face Advice Is the Best Advice

It’s always a good and secure feeling to listen to another human voice and have a
face-to-face conversation with someone, rather than having to deal with a lifeless
machine.

When you ask for online recommendations for your investments, the suggestions are
usually coming from a computerised platform, trained to deal with your queries.
However, this is not enough. It’s only natural to have trust issues with a machine
handling your money matters for you.

Furthermore, it is an undeniable fact that financial advisors have more knowledge on
investments based on their experience in the field. You can have a real conversation
with them, asking question after question till you are satisfied with the answers. You
cannot do the same with online recommendations.

You also have tax deductions to take care of, which requires the recommendations
of an expert dealing with such matters for years. Websites can never estimate the
life changes that might occur unless a user feeds new data into it. In the same way, it
cannot get around the complex calculations of tax reporting, which can greatly affect
your financial decision in the long-run.

#3 Variety of Options

When you opt for online recommendations, the investment options in the results are
limited. This means that you can only opt for what lies in front of your eyes.

Representational image.
Representational image. Pixabay

If you are choosing a term policy, you would like to be judged on more than just a
few questions that you see on your screen and reap maximum life benefits from it.
You would like to know what riders are available along with the term policy, different
types of plans and benefits of the same. You can get all these answers when you
talk to an insurance provider, rather than an online recommendation system.

Furthermore, there are certain conditions that you may have doubts about, especially
pertaining to life policies wherein a divorce or death could bring in changes to the
policy, which needs to be clarified with a real person.

Online recommendations are good to go as long as your investment deals with low-
risk goals like a short-term investment or calculating your home loan or insurance
premium. For long-term goals like investment for the education of your children or
retirement, this tool only creates high risk.

Final Takeaway:

The final word is that online recommendation systems might be standing their
ground in the world of investment, but when you are not sure which direction to move
towards, financial advisors are your saviours.

A certified financial advisor adept with knowledge of your financial situation will prove
to be more proactive in aligning your investments.

Financial advisors, unlike online recommendations, can assist you in figuring out
whether you are on track with your savings and how other investment options can
benefit you in future.