IMF, GDP - Current Affairs Questions and Answers

ANSWER: Ageing

Explanation:
The International Monetary Fund (IMF) called on Asian economies to learn from Japan’s experience and act early to cope with rapidly ageing populations, warning that parts of the region risk getting old before becoming rich.

Asia has enjoyed substantial demographic dividends in the past decades, but the growing number of elderly is set to create a demographic “tax” on growth, according to the IMF.

Adapting to ageing could be especially challenging for Asia, as populations living at relatively low per capita income levels in many parts of the region are rapidly becoming old.

Some countries in Asia are getting old before becoming rich.

The population growth rate is projected to fall to zero for Asia by 2050 and the share of working-age people, now at its peak, will decline over the coming decades, the report said.

The share of the population aged 65 and older will increase rapidly and reach close to two-and-a-half times the current level by 2050, it said.

That means demographics could subtract 0.1 percentage point from annual global growth over the next three decades, it said.

The challenges are particularly huge for Japan, which faces both an ageing and shrinking population. Its labour force shrank by more than 7 per cent in the past two decades.

The high percentage of its citizens living on pensions may be behind Japan’s excess savings and low investment, which are weighing on growth and blamed in part for keeping inflation below the Bank of Japan’s 2 per cent target.

Japan’s experience highlights how demographic headwinds can adversely impact growth, inflation dynamics and the effectiveness of monetary policy.

The IMF called on Asian nations to make changes like introducing credible fiscal consolidation plans, boosting female and elderly labour force participation, and revamping social safety nets.

ANSWER: Both of the above

Explanation:
Union Cabinet on March 15, 2017 approved the National Health Policy 2017 aiming to increase public healthcare expenditure to 2.5 percent of GDP.

More than two-thirds of resources will be going towards primary healthcare.

The policy is aiming to reach healthcare to all parts of the country, specially the underserved and underprivileged.

The last national health policy was framed in 2002.

This policy guides a time-bound implementation framework with clear milestones and distinct deliverables to attain policy goals.

The policy works to raise public healthcare expenditure to 2.5% of the GDP from the current 1.4%.

Features of the National Health Policy

• Policy envisages larger package of assured comprehensive primary healthcare via Health and Wellness centres.
• This is an extensive package including care for NCDs, mental health, geriatric care, palliative and rehabilitative care services.
• It works to ensure availability of 2 beds for every 1000 persons to enable access within emergency.
• The policy aims to make healthcare accessible for all and offers financial protection, proposing free drugs, diagnostics and emergency as well as healthcare services in public medical hospitals.
• The policy also aims to raise life expectancy from 67.5 to 70 years by 2025.
• It also aims to establish regular tracking of disability adjusted life years or DALY index as a measure of burden of disease and trends through major categories by 2022.
• The reduction of total fertility rate to 2.1 at national and sub-national levels was aimed for by 2025.
• Another goal of this policy is to reduce mortality of children under 5 years of age to 23 per 1000 by 2025 and maternal mortality rate from current levels to 100 by 2020.
• The scheme also aims to reduce infant mortality rate to 28 by 2019 and reduce neo natal mortality to 16 and still birth rate to single digit by 2025.
• The policy aims to strengthen the regulatory environment and seeks putting in place systems for setting standards and ensuring healthcare quality.
• The policy also checks out reforms in the current existing regulatory systems for easing manufacturing of drugs and devices for promoting Make in India and reforming medical education.
• Policy advocates development of mid-level service providers, nurse practitioners, public health cadre to improve availability of required health human resource.

ANSWER: 6.6

Explanation:
IMF has cut down India's growth rate for the current fiscal year to 6.6 percent. The previous estimate was 7.6%.

The slowing of the growth rate is on account of temporary negative consumption shock of demonetisation after the WB decelerated India's growth estimates.

Growth forecast for the current and next fiscal year were trimmed by one percentage and 0.4 percentage points, due to temporary negative consumption shock .

This has been caused by cash shortage and payment disruption noted with recent currency note withdrawal and exchange, as per World Economic Outlook released by the IMF.

IMF also said after a lackluster outturn in 2016, economic activity will pick up in the next 2 years. This is more so for the emerging market and developing economies.

Global growth for 2016 is now 3.1 percent in line with the Oct 2016 forecast.

The economic activities in emerging markets and developing economies/EMDEs is to accelerate in 2017-2018 with global growth at 3.4 and 3.6 percent respectively.

India's growth in 2017 is projected at growth rate of 7.2% as against previous growth forecast of 7.6 percent.

Indian economy is expected to revive with 7.7% growth in 2018.

Cut in the growth rate comes after WB decelerated India's GDP growth for 2016-2017 fiscal to 7 percent from previous estimate of 7.6 percent citing impact of demonetisation.

India would regain momentum in coming years. India continues to be among the fastest growing countries in the emerging economies.

In 2016, China with a growth percentage of 6.7% has outperformed India. IMF has forecasted China's growth rate to 6.5% for 2017 based on continued policy support.

In 2018, China is projected to grow at 6 percent against India's 7.7%.

IMF: Know More

• Abbreviation stands for: International Monetary Fund
• Formation: 27 December 1945
• Type: International financial institution
• Headquarters: Washington, D.C., United States
• Membership: 189 countries
• Official language: English
• Managing Director: Christine Lagarde
• Main organ: Board of governors
• Parent organization: United Nations
• Staff: 2,700

ANSWER: Bernard Tapie

Explanation:
International Monetary Fund head Christine Lagarde was on 19th Dec 2016 convicted for negligence over a massive state payout to a tycoon when she was French finance minister.

Though convicted, she was not given a sentence.

The 2007 decision by Lagarde to permit a dispute over flamboyant businessman Bernard Tapie's sale of the Adidas sports brand to Credit Lyonnais bank to be resolved by private arbitration panel was under scrutiny.

The 60-year-old former corporate lawyer is also accused of failing to challenge the 404-million-euro (USD 422 million) award that emerged from the arbitration.

The payout raised concerns given Tapie's overt support for Lagarde's then boss, ex-president Nicolas Sarkozy, and it was subsequently cancelled by the courts.

Tapie had sold Adidas to Credit Lyonnais for the equivalent of 315.5 million euros in 1993.

The bank sold it on the following year for 701 million euros, prompting claims from Tapie that he had been cheated.

Another ex IMF head, Rodrigo Rato of Spain, is currently standing trial on charges of misusing funds when he was head of Spanish lender Bankia.

International Monetary Fund

• Abbreviation: IMF
• Formation: 27 December 1945
• Type: International financial institution
• Headquarters: Washington, D.C., United States'
• Membership: 189 countries
• Official language: English
• Managing Director: Christine Lagarde
• Main organ: Board of governors
• Parent organisation: United Nations
• Website: www.imf.org

ANSWER: 7.3

Explanation:
Central Statistical Office on 30th Nov 2016 announced India’s GDP accelerated to 7.3 percent in the second quarter of 2016-2017. This is up from a provisional 7.1 percent expansion in Q1.

Gross Value Added rose to 7.1 percent.

GDP growth accelerated in the second quarter from 7.1 percent, but GVA growth slowed 7.3 percent in that period.

Both GDP and GVA growth were slower in this Q2 compared to 2015-2016’s Q2. The Q2 of 2015-2016 showed a GDP growth of 7.6 percent and GVA growth of 7.3 percent.

The agriculture sector maintained the overall growth by registering a 3.3 percent GVA growth rate in Q2 of this financial year in comparison with 2 percent in Q2 of 2015-16.

The manufacturing sector saw considerable slowdown as it registered GVA growth of 7.1 percent in Q2 of this financial year as against 9.2 percent in 2015-2016’s Q2.

The mining and quarrying sector growth fell by 1.5 percent in Q2 compared with the contraction of 0.4 percent in the first quarter and a growth of 5 percent in Q2 of 2015-16.

Sectors like manufacturing, electricity, mining, services and others show a fall in the September quarter because they are not supported by demand.

Except for agriculture, public administration and construction, drop in outputs across all sectors took place.

Gross fixed capital formation equalled 29 percent of GDP in this Q2 compared to 32.9 percent in the previous year’s Q2.

Government final consumption expenditure was 13 percent of GDP in this Q2 compared to 12.1 percent in the earlier year. GFCE grew 18.8 percent in this Q1 and 15.2 percent in this Q2.

Government’s Capital Expenditure (Plan and Non Plan) fell 12.81 percent to INR 129459 crore as against INR 143329 crore a year back.

What is GDP?

GDP: Monetary value of all finished goods and services produced in a country in a certain time period. It is generally calculated on annual basis; it can be computed on quarterly basis as well.

It is a broad measurement of nation’s overall economic activity.

GDP = Private consumption+ Public consumption+ Government outlays+ Investments + Exports - Imports.

Where, GDP = C + G + I + NX

• C = all private consumption, or consumer spending
• G = sum of government spending,
• I = sum of all the country's investment, including businesses capital expenditures and
• NX is the nation's total net exports, calculated as total exports minus total imports (NX = Exports - Imports).

ANSWER: 1.3-1.5

Explanation:
Ind-Ra lowered FY2017 CAD estimate to 1.3-1.5 percent from 1.2 percent due to lower remittances and software earnings in forth quarter for current fiscal. India’s CAD narrowed sharply to USD 0.3 billion/o/1 percent of GDP in Q4, FY2016 from USD 7.1 billion or 1.3 percent in Q3 on account of lower trade gap.

• For the 2015-2016 fiscal, CAD or the difference in the in and outflow of foreign exchange fell to 1.1 percent of the GDP
• Low CAD indicates stability on the external front. On the one hand, low crude prices and collapse in global prices of commodities have resulted in lower trade deficit
• Low oil prices have caused Middle East economies to suffer as well.
• Remittances on private transfers fell to USD 63.1 billion in 2015-2016

ANSWER: Sri Lanka

Explanation:
IMF on June 7th 2016 approved the US $1.5 billion loan to Sri Lanka. IMF has transferred 168 million US dollars as the first instalment with immediate effect to provide support for the country’s economy

• IMF executive board accepted the 36 month extended arrangement under Extended Fund Facility with Sri Lanka under SDR
• With an early disbursement of 168.1 million US dollars to be made immediately, the remaining amount will be settled in 6 instalments on quarterly review
• Additional 650 million US dollars support will be brought to other multilateral and bilateral loans bring total support to US 2.2 billion US dollars

ANSWER: 1, 3

Explanation:

• India spends about 1.16% of its GDP.
• Sri Lanka spends 1.21% and USA 7.99%.
• Bangladesh spends 1.12%. Pakistan spends 1.03%

ANSWER: 7.5 percent

Explanation:
International Monetary Fund has retained growth forecast for India at 7.5 percent driven mostly by private consumption even as sluggish credit growth and weak exports impact the economy. India’s growth momentum is driven by private consumption benefiting from low energy prices and higher real incomes.

• IMF has said policy makers will speed up structural reform implementation- weak exports and sluggish credit growth stand in the way
• Additional steps in relaxing bottlenecks especially in mining and labour market reforms will increase labour market flexibility and foster inclusive growth.
• As per IMF, growth in Asia and Pacific will remain strong at 5.3 percent this year

ANSWER: 8%

Explanation:
Terming GDP calculation as an imprecise science, CII has pegged the economic growth of the country at 8 percent for the current fiscal, higher than 7.6% pegged by the RBI. GDP growth of 8 percent is expected in 2016-2017says CII President Naushad Forbes. The basis for this economic prediction includes strong macroeconomic fundamentals and good business sentiments as well as downward trend in interest rates. CII’s new president also highlighted the need for focusing on regulatory mechanisms.