The International Monetary Fund (IMF) on Tuesday cut India’s FY20 and FY21 GDP growth forecast by 20 basis points on account of loss in momentum. The international body follows the same action by the Asian Development Bank (ADB) and the Reserve Bank of India (RBI).FY20 GDP growth is seen at 7.3 per cent against earlier estimate of 7.5 per cent, while FY21 GDP growth is seen at 7.5 per cent against earlier estimate of 7.7 per cent, the IMF said.
Continued recovery in investment and robust consumption would support India’s growth moving ahead, the international body added. The expected impetus from fiscal policy is being seen supporting growth prospects, The IMF outlook noted.
The IMF’s World Economic Outlook has once again downgraded global growth to 3.3 percent for 2019, two tenths lower than the global crisis lender forecast in January and four tenths lower than October.
The quarterly report “projects a slowdown in growth in 2019 for 70 percent of the world economy,” IMF chief economist Gita Gopinath said in a statement on Tuesday.
Emerging economic powers China and India continue to show the highest growth rates, 6.3 percent and 7.3 percent, respectively. Beijing has rolled out a series of fiscal stimulus measures to counteract the hit from the US trade war but India’s growth was downgraded by two tenths of a point.
“This is a delicate moment for the global economy,” Gopinath said. “This recovery is precarious and predicated on a rebound in emerging market and developing economies,” including Argentina and Turkey.
While a rebound is possible if policymakers avoid all the potential pitfalls, Gita Gopinath also warned that “If, however, any of the major risks materialize, then the expected recoveries in stressed economies, export-dependent economies, and highly-indebted economies may be derailed.”