IMF slashes China growth projections and says India to benefit from reforms

The International Monetary Fund has slashed growth projections for China citing slowing investment growth but largely kept its estimates for India saying lower oil prices and policy reforms have helped offset external negatives there.

The Chinese economy will expand 6.8% in 2015 and 6.3% in 2016, as per the January edition of the IMF's Global Economic Outlook, down from October WEO's 7.1% and 6.8% respectively.

At the same time, India's growth forecast has been reduced only by 0.1 percentage point for 2015 to 6.3% while keeping the 2016 estimate unchanged at 6.8%, from the October estimates.

"Investment growth in China declined in the third quarter of 2014, and leading indicators point to a further slowdown," the IMF said.

"The authorities are now expected to put greater weight on reducing vulnerabilities from recent rapid credit and investment growth and hence the forecast assumes less of a policy response to the underlying moderation."

The IMF said slower growth in China will also have important regional effects, which partly explains the downward revisions to growth in much of emerging Asia.

"In India, the growth forecast is broadly unchanged, however, as weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms," the Fund said.