Washington: The International Monetary Fund (IMF) has lowered India's economic growth rate forecast to 7 percent for the year 2012, which is 0.5 percentage point lower than its projection made last September for the same period.
For 2013, the IMF has revised the growth forecast to 7.3 percent, which is again 0.8 percentage point lower than it earlier forecast.
The IMF, in its revised estimates, has also brought down the economic growth forecast for most of the major economies, including China.
"The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere. Financial conditions have deteriorated, growth prospects have dimmed, and downside risks have escalated," said the latest World Economic Outlook report released by the IMF here on Tuesday.
Global output is projected to expand by 3.25 percent in 2012 a downward revision of about 0.75 percentage point relative to the September 2011 World Economic Outlook.
This is largely because the euro area economy is expected to go into a mild recession in 2012 as a result of the rise in sovereign yields, the effects of bank deleveraging on the real economy, and the impact of additional fiscal consolidation, the report said.
"Growth in emerging and developing economies is also expected to slow because of the worsening external environment and a weakening of internal demand," the World Economic Outlook report said.
The most immediate policy challenge is to restore confidence and put an end to the crisis in the euro area by supporting growth.