World economy can bounce back if the advanced economies remove policy uncertainties, Finance Minister P Chidambaram said today, maintaining that the Indian economy has been impacted by the global growth slowdown.
In his address to the International Monetary Finance Committee here, Chidambaram said there has been marked improvement in financial market sentiment in the recent period following some significant measures announced by policymakers in the Euro area and the US.
"The global macro-economic situation is also beginning to stabilise. Although confidence has improved, it still remains fragile and the global economy continues to face several critical challenges," he said.
"Despite all these uncertainties, the global economy can bounce back if advanced economies continuously keep progressing on removing policy uncertainties and if we are able to remove some of the major bottlenecks in the real sector of the economy," Chidambaram said.
Addressing the annual Spring meeting of the IMF, Chidambaram said, global growth remains weak and the global economy continues to face several risks.
He said the present state of the global economy continues to pose several challenges for policymakers in advanced and emerging economies.
"Moreover, some new concerns have also arisen. As such, the global economy continues to pose huge challenges for policymakers, particularly in advanced economies," Chidambaram said.
Although the re-balancing of the Euro area continues, recent developments in Cyprus suggest that the situation in the Euro area is far from settled, he said.
He also spoke about India's economic situation, saying that the Indian economy was impacted by the global growth slowdown, while several domestic constraints also acted as a drag on economic activity.
"Economic activity in India remains somewhat sluggish. Given its relatively high degree of openness, the Indian economy was impacted by the global growth slowdown. At the same time, several domestic constraints also acted as a drag on economic activity," Chidambaram said in his address.
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