What is it that the IMF is not telling us?

The International Monetary Fund has cut its prediction for growth in the global economy from 3.4% to 3.2%. India's growth rate was predicted at 7.5% but the report says," Fiscal consolidation should continue, underpinned by revenue reforms and further reduction in subsidies. Sustaining strong growth over the medium-term will require labour market reforms and dismantling infrastructure bottlenecks, especially in the power sector." Which is another way of saying that government must not exceed its spending target, so that inflation does not rise, the GST bill must be passed, labour laws must be reformed, population must be reduced to cut the subsidy bill and politicians must be stopped from promising free power to win elections. The Purchasing Managers' Index in March was 52.4 and output prices are rising. Core inflation, which does not include volatile food and fuel prices, rose to 4.9%, which means there is an underlying tendency for prices to rise. If the monsoon is good this year it will bring down food prices, which will mean lower retail inflation, but rural consumption will rise pushing up core inflation. It will be interesting to see what the RBI does with the interest rate. A lot will depend on the rupee. If it goes down it will help exports but increase prices of imports, especially oil, which will push up inflation, but if the rupee strengthens imports will become cheaper which means the Prime Minister's efforts of 'Make in India' will be that much harder. The strength of the rupee denotes its exchange rate against the dollar, which depends on what the Federal Reserve does with interest rate in the US. China has been gradually devaluing the yuan against the dollar, to protect its exports, and the Fed has been restrained for fear of upsetting China. The IMF has projected a healthy growth rate of 6.5% for China this year, as it restructures its economy away from investment towards domestic consumption and services. But some believe that China is not rebalancing its economy but is creating another real estate bubble instead. At the moment it is in a 'sweet spot' between bubbles but a hard landing is almost inevitable. Chinese companies are withdrawing their bonds from sales, $7 billion worth of sales were cancelled last month. Yet the level of debt is increasing. The non-financial private sector debt is 205.2% of GDP and the general government debt is 43.5%, for a total of 248.7% of GDP. It was 234.2% of GDP in December 2014. Since the crisis of 2008 non-financial debt has risen by $6.5 billion per day in China. Central banks have run out of ammunition to stimulate growth, prompting some economists to suggest a common currency for the entire world. We have one Greece because of the Euro, imagine 100 Greeces. Things must be pretty desperate if they are discussing fruit-cake ideas. Maybe they are not telling us the whole truth. Oh boy.