The International Monetary Fund (IMF) on Tuesday cut India's FY20 growth forecast by 30 bps to 7 per cent, owing to weaker-than-expected outlook for domestic demand.
The International Monetary Fund (IMF) on Tuesday cut India’s FY20 growth forecast by 30 bps to 7 per cent, owing to weaker-than-expected outlook for domestic demand. Similarly, the FY21 forecast has been slashed by 30 bps to 7.2 per cent. However, India would continue to remain the fastest growing major economy globally, ahead of China, the global financial institution said.
“India’s economy is set to grow at 7.0 per cent in 2019, picking up to 7.2 per cent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than expected outlook for domestic demand,” the IMF said. The growth in emerging markets and developing economies is seen rising to 4.7 per cent in 2020 as against 4.8 per cent earlier.
The global growth is being revised downward against its earlier projection of 3.2 per cent in 2019 and 3.5 per cent in 2020, Gita Gopinath, Chief Economist, IMF said. “While this is a modest revision of 0.1 percentage points for both years relative to our projections in April, it comes on top of previous significant downward revisions. The revision for 2019 reflects negative surprises for growth in emerging market and developing economies that offset positive surprises in some advanced economies,” Gita Gopinath, Chief Economist, IMF also said.
The key reason why the global growth has been downgraded is rising trade war and disruption to supply chains. She also added that it is imperative for the global economy not to target bilateral trade balances as means of disagreements. “To help resolve conflicts, the rules-based multilateral trading system should be strengthened and modernised to encompass areas such as digital services, subsidies and technology transfer,” Gita Gopinath added.