IMF’s latest estimate is lower than that of both the National Statistics Office and the Reserve Bank of India, which have forecast a 5% expansion for the country in FY20.
The International Monetary Fund (IMF) on Monday trimmed its India growth forecast estimate to just 4.8% for FY20 from 6.1% projected in October 2019, citing stress in the country’s shadow-banking sector as well as weak rural income growth.
Offering an update on the global economy on the eve of the World Economic Forum (WEF) annual summit in Davos, the multilateral body said India’s growth would be just 5.8% in FY21 (much lower than the 7% reported earlier), and then rise to 6.5% in the year after that, supported by monetary and fiscal policy stimulus.
In contrast, China’s growth has been revised up by 20 basis points to 6% for 2020, reflecting the impact of its latest deal with the US which has signalled a temporary thaw in the global trade war, according to the multilateral body.
India-born IMF chief economist Gita Gopinath said the pickup in global growth for 2020 remains highly uncertain as it relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for under-performing emerging and developing economies such as Brazil, India and Mexico.
IMF’s latest estimate is lower than that of both the National Statistics Office and the Reserve Bank of India, which have forecast a 5% expansion for the country in FY20. However, the estimate in sync with some of the other international agencies. World Bank, too, is expected to revise down its India forecast for FY20 soon from 6%, announced last year.
The IMF predicted that a slowdown in global growth appeared to have bottomed out but there was no rebound in sight, thanks to risks from trade war and climate shocks. It now sees growth at 3.3% in 2020, lower than its October 2019 projections of 3.4%, and also trimmed the 2021 forecast to 3.4% from 3.6%.