India’s growth is estimated at 4.8% in 2019, projected to improve to 5.8 % in 2020 and 6.5% in 2021, the IMF said.
The International Monetary Fund (IMF) has slashed its estimate on India’s FY20 GDP growth to 4.8% from the earlier projection of 6.1%, citing a sharper-than-expected slowdown due to negative surprises to economic activity.
The IMF estimated India’s growth at 4.8% in FY 2019-20 but projected improvement to 5.8% in 2020-21 and 6.5% in 2021-22.
The agency has also trimmed back its 2020 global growth forecasts from 3.4% from an earlier estimate of 3.3% due to slowdowns in India and other emerging markets.
"Global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% for 2021—a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021 compared to those in the October World Economic Outlook (WEO)," the IMF said in the World Economic Outlook (WEO) published on Monday.
"The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years. In a few cases, this reassessment also reflects the impact of increased social unrest," it said.
The agency's forecast for India is very worrying as it estimates that the growth will only partially pick up to 6.5% in FY22.
The global growth markdown largely reflects a downward revision to India’s projection, where domestic demand has slowed more sharply than expected amid stress in the nonbank financial sector and a decline in credit growth, the IMF said.
"India’s growth is estimated at 4.8% in 2019 (FY20), projected to improve to 5.8 % in 2020 (FY21) and 6.5% in 2021 (FY22) (1.2 and 0.9 percentage point lower than in the October WEO), supported by the monetary and fiscal stimulus as well as subdued oil prices," it said.
In FY19, India's growth by the IMF was recorded to be 6.8%.
Earlier, the advance estimates released by the National Statistical Office (NSO) forecast India's GDP growth dipping to an 11-year low of 5% in the current fiscal.
The growth in real GDP during 2019-20 is estimated at 5% as compared to 6.8% in 2018-19, the data released by NSO earlier this month said.
The Reserve Bank of India (RBI) had also lowered its forecast for the economic growth to 5% in 2019-20 while announcing its bi-monthly monetary policy in December last year.
For global growth, a negative trend in the Chinese economy is also worrying as the IMF forecast says it will come down below 6% in 2021.
"Growth in China is projected to inch down from an estimated 6.1% in 2019 to 6.0% in 2020 and 5.8% in 2021, it said.
The recent “Phase One” trade deal with the United States, has given some positive outlook as it is "likely to alleviate near-term cyclical weakness, resulting in a 0.2 percentage point upgrade to China’s 2020 growth forecast relative to the October WEO."
However, unresolved disputes on broader US-China economic relations as well as needed domestic financial regulatory strengthening are expected to continue weighing on activity, it said.
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