IMF lowers India’s growth forecast to 4.8%

According to the International Monetary Fund, global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% for 2021.

Projections for India

• The IMF has lowered India’s economic growth estimate for the current fiscal to 4.8%.
• This marks a lowering of its own estimate of 6.1% made in October 2019.
• The latest trend in global growth is a downward revision of 10 basis points for 2019 and 2020 and 20 basis points for 2021 compared to the forecast in the IMF’s October 2019 World Economic Outlook (WEO).

Projections for global growth:

• The IMF’s new projections estimate that global growth would be 2.9% in 2019, and would increase to 3.3% in 2020 and 3.4% in 2021.
• However, compared to the October 2019 WEO forecast, the estimate for 2019 and the projection for 2020 represent 0.1 percentage point reduction for each year while that for 2021 is 0.2 percentage point lower.
• This is partly from an improvement in the auto sector and diminished fears of a no-deal Brexit.
• A no-deal Brexit means the UK would leave the European Union (EU) and there would be no agreements in place about what the relationship between the UK and the EU will be like in the future.
• Also, a US-China Phase I deal (to ease tensions related to trade between the two nations), if durable, is expected to reduce the cumulative negative impact of trade tensions on global GDP by end 2020-from 0.8% to 0.5%.
• Collective growth in the 19 countries that use the euro currency is expected to gradually pick up from 1.2% in 2019 to 1.3% in 2020 and 1.4% in 2021.

PAPER-III