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IMF slashes India’s growth estimate to 4.8% for 2019

21 Jan 2020 Evaluate

Citing a sharper-than-expected slowdown in local demand and stress in the non-bank financial sector, the International Monetary Fund (IMF) has slashed India’s growth estimate to 4.8% for 2019. Though, it expects growth to be 5.8% in 2020 and rise to 6.5% in 2021. IMF Chief Economist Gita Gopinath said growth in India slowed sharply owing to stress in the non-bank financial sector and weak rural income growth. Besides, she said China’s growth has been revised upward by 0.2% to 6% for 2020, reflecting the trade deal with the United States.

In India, the IMF said domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth. The markdown has been the highest for India in the latest WEO projections. Besides, the report cited monetary and fiscal stimulus, along with its expectation of subdued oil prices, for the projected improvement in India’s growth this year and the next.

Gopinath also 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 underperforming emerging and developing economies such as Brazil, India, and Mexico. On the global front, it said growth is expected to accelerate to 3.3% in 2020 from 2.9% in 2019 and further to 3.4% in 2021. The IMF has trimmed its estimate on the world economy by 0.1 point each for 2019 and 2020 and by 0.2 percentage point for 2021 from the earlier forecasts.

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