Keeping its predictions for India's growth unchanged at 8.2% this year and 7.8% in 2012, the International Monetary Fund (IMF) says global activity is slowing down temporarily and downside risks have increased again.
Noting that global expansion remains unbalanced, the IMF says in its June update of the World Economic Outlook (WEO) that while growth in most emerging and developing economies continued to be strong, growth in many advanced economies was still weak, considering the depth of the recession.
In addition, the mild slowdown observed in the second quarter of 2011 was not reassuring.
Overall, the global economy expanded at an annualised rate of 4.3% in the first quarter, and forecast for 2011-12 was broadly unchanged, with offsetting changes across various economies, WEO said.
However, greater-than-anticipated weakness in US activity and renewed financial volatility from concerns about the depth of fiscal challenges in the euro area periphery pose greater downside risks, it said.
Risks also draw from persistent fiscal and financial sector imbalances in many advanced economies, while signs of overheating were becoming increasingly apparent in many emerging and developing economies, the IMF said.
Strong adjustments - credible and balanced fiscal consolidation and financial sector repair and reform in many advanced economies, and prompter macroeconomic policy tightening and demand rebalancing in many emerging and developing economies - were critical for securing growth and job creation over the medium term, the WEO said.
Despite some negative surprises, global growth attained an annualized rate of 4.3% in the first quarter of 2011, broadly as expected in the April 2011 WEO, it said.
Growth in emerging and developing economies evolved as expected, but with considerable variation across regions. Global employment continued to pick up, including in many advanced economies, the IMF said.
Global inflation picked up from 3.5% in the last quarter of 2010 to four% in the first quarter of 2011, more than 0.25%age point higher than projected in the April 2011 WEO.