Washington– The International Monetary Fund (IMF) on Tuesday marginally lowered India’s growth forecast to 7.4 per cent for 2016 and 2017, from the 7.5 per cent in April, due sluggish recovery in private investment, even as it blamed Brexit for provoking global economic uncertainty.

“In India, economic activity remains buoyant, but the growth forecast for 2016-17 was trimmed slightly, reflecting a more sluggish investment recovery,” the IMF said in its latest update of World Economic Outlook.

“The outcome of the UK vote, which surprised global financial markets, implies the materialisation of an important downside risk for the world economy. As a result, the global outlook for 2016-17 has worsened, despite the better-than- expected performance in early 2016,” the multilateral agency said.

The IMF also lowered the global growth forecast for 2016 by 0.1 percentage point relative to April, to 3.1 per cent.

“The first half of 2016 revealed some promising signs – for example, stronger than expected growth in the euro area and Japan, as well as a partial recovery in commodity prices that helped several emerging and developing economies.

“As of June 22, we were therefore prepared to upgrade our 2016-17 global growth projections slightly. But Brexit has thrown a spanner in the works,” said IMF Economic Counsellor and Director of the Research Department Maury Obstfeld.

“The real effects of Brexit will play out gradually over time, adding elements of economic and political uncertainty. This overlay of extra uncertainty, in turn, may open the door to an amplified response of financial markets to negative shocks,” he added.

The Asian Development Bank (ADB) on Monday said the Indian economy is on course to meet its projected growth target of 7.4 per cent in 2016-17, on the back of brisk consumer spending and an upturn in the rural economy.

The Indian economy grew at 7.6 per cent in 2015-16, while the government expects it to grow at over 8 per cent in 2016-17.

American agency Fitch Ratings on Monday projected India’s GDP growth to accelerate slightly to 7.7 per cent in 2016-17 and 7.9 per cent in 2017-18, while retaining India’s sovereign ratings at the lowest investment grade of BBB- with a stable outlook.