indica News Bureau-
The economic slowdown in India was the primary reason behind global growth estimates being downgraded in the latest World Economic Outlook, said International Monetary Fund’s Chief Economist Gita Gopinath.
According to a report on Live Mint, “We project global growth to increase modestly from 2.9% in 2019 to 3.3% in 2020 and 3.4% in 2021. The slight downward revision of 0.1 percentage point for 2019 and 2020, and 0.2 percentage point for 2021, is owed largely to downward revisions for India,” she said in IMF’s World Economic Outlook
India’s growth forecast was also downgraded for 2019 to 4.8 per cent from 6.1 per cent on the back of sharp decline in consumer demand, stress in the NBFC sector and sluggish credit growth.
This survey by the IMF staff usually published twice a year. It presents IMF staff economists’ analyses of global economic developments during the near and medium term. It gives an overview as well as detailed analysis of the world economy; considers issues affecting industrial countries, developing countries, and economies in transition to market; and addresses topics of pressing current interest.
The survey suggests that the downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest.
“In the third quarter of 2019, growth across emerging market economies (including India, Mexico, and South Africa) was weaker than expected at the time of the October WEO, largely due to country-specific shocks weighing on domestic demand”, the report read.
The advanced economy group slowed broadly as anticipated (mostly reflecting softer growth in the US after several quarters of above-trend performance). Despite continued job creation (in some cases, in the context of unemployment rates already at record lows), core consumer price inflation remained muted across advanced economies. It softened further across most emerging market economies amid more subdued activity. Weak demand lowered metals and energy prices, which kept a lid on headline inflation.
IMF’s October WEO predicted Indian economy finding its feet back by 2021, supported by monetary and fiscal stimulus as well as subdued oil prices. But for that to happen, the rampant problem of non-performing assets needs to be addressed first.
“We see India recovering. There is a significant recovery coming in the next fiscal year. There is a fair amount of monetary stimulus in the system, corporate tax cuts are also there — these should help with recovery in growth,” said Gopinath.
The IMF said its projections depend on “avoiding further escalation” in an ongoing “unresolved” economic dispute between the US and China.
President Donald Trump signed a deal with China last week that eases tension in the short term but leaves tariffs in place on two-thirds of Chinese goods imported to the US. “Trade truce is not the same as trade peace,” Georgieva Friday, commenting on the deal.
