IMF slashes India’s GDP growth forecast from 7.5% to 6.1% in 2019

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New Delhi | Published: October 16, 2019 5:00:25 AM

Moody’s Investors Service had last Thursday cut its forecast for India’s FY20 GDP growth by 40 bps to 5.8%, in what reflected a continuing trend of such downward revisions by prominent domestic and foreign agencies.

Moodys on india, moody indian economy, economic slowdown india, india growth, india gdp, economic slowdown china, Moodys Investors Service, MIS, moody on india, imf india, world bank india, rbi repo rate “In India, growth softened in 2019 (FY20) as corporate and environmental regulatory uncertainty, together with concerns about the health of the non-bank financial sector, weighed on demand,” the fund bank said

The International Monetary Fund (IMF) on Tuesday sharply revised downward India’s GDP growth projections by 90 bps to 6.1% for FY20 and by 20 bps to 7% for FY21.

On Sunday, the World Bank had slashed India FY20 growth estimate to 6% from its original call of 7.5%.

“In India, growth softened in 2019 (FY20) as corporate and environmental regulatory uncertainty, together with concerns about the health of the non-bank financial sector, weighed on demand,” the fund bank said ahead of the IMF and World Bank annual meetings this week in Washington.

“Growth will be supported by the lagged effects of monetary policy easing, a reduction in corporate income tax rates, recent measures to address corporate and environmental regulatory uncertainty, and government programmes to support rural consumption.” the Fund said.

“The strengthening of growth in 2020 and beyond in India as well as for these two groups (which in some cases entails continued contraction, but at a less severe pace) is the driving factor behind the forecast of an eventual global pickup,” it said. The two groups refer to smaller emerging countries such as Argentina and Iran and bigger emerging nations such as Brazil and Russia.

Moody’s Investors Service had last Thursday cut its forecast for India’s FY20 GDP growth by 40 bps to 5.8%, in what reflected a continuing trend of such downward revisions by prominent domestic and foreign agencies.

In its latest bimonthly monetary policy statement on October 4, RBI also cut its growth projection for the domestic economy by a sharp 80 bps to 6.1%, citing that the slump in real GDP growth to 5% in the first quarter of FY20 has been followed by “generally weaker high frequency indicators for the second quarter”.

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