IMF has cut India's growth estimate by a third in about a year— and the slowdown is weighing the world economy
- The International Monetary Fund has cut India's GDP growth estimate to a mere 4.8% in its latest revision.
- This is a sharp fall from the 7.5% growth estimate it had for India's economy the same time last year.
- The IMF also cited the economic slowdown in India for the sharp reduction in the growth estimate for the global economy.
"Domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth," the IMF said while cutting down the growth estimates for India.
In the next fiscal year i.e. financial year ending March 2021, India's growth rate is expected to increase by 1% to 5.8%. However, IMF projects India to be the second fastest-growing major economy this year and the next, behind China's 6.1% this year and 6.4% next year.
Not just that, IMF's World Economic Outlook (WEO) also blamed India's economic slowdown for a "lion's share" of the 0.1% cut in the global economic growth projections for last year to 2.9% and to 3.3% for the current year from those made in October. "A more subdued growth forecast for India accounts for the lion's share of the downward revisions," the IMF said.
The one from IMF is also the lowest growth projection among international organisations. The World Bank estimated India's growth rate to be 5% while the UN put it at 5.7%. "Trade policy uncertainty, geopolitical tensions, and idiosyncratic stress in key emerging market economies continued to weigh on global economic activity, especially manufacturing and trade, in the second half of 2019," the IMF added as reasons.
It added, "Intensifying social unrest in several countries posed new challenges, as did weather-related disasters." Despite these, IMF said, "Some indications emerged toward year-end that global growth maybe bottoming out."
At the same time it cautioned, "Downside risks, however, remain prominent, including rising geopolitical tensions, notably between the United States and Iran, intensifying social unrest, further worsening of relations between the United States and its trading partners, and deepening economic frictions between other countries."
With inputs from IANS
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