IMF cuts India’s growth forecast for 2019-20 to 7%

Cites weaker-than-expected outlook for domestic demand

(FILES) This file photo taken on April 11, 2019, shows the seal of the International Monetary Fund at IMF Headquarters in Washington, DC. - Global trade tensions and continued uncertainty are sapping the strength of the world economy, which faces a "precarious" 2020, the International Monetary Fund warned on July 23, 2019. Trade conflicts are undercutting investment, and the IMF urged countries not to use tariffs in place of negotiations. In its quarterly update of its World Economic Outlook the IMF trimmed the global forecast issued in April by 0.1 this year and next, with growth expected to hit 3.2 percent in 2019 and 3.5 percent in 2020. (Photo by MANDEL NGAN / AFP)

The International Monetary Fund (IMF) has cut India’s growth forecast for 2019-20 to 7% from its forecast in April of 7.3% on poor demand conditions, it said on Tuesday.

The IMF’s World Economic Outlook July update also cut India’s growth forecast in 2020-21 to 7.2% from the previous estimate of 7.5%.

“India’s economy is set to grow at 7% in 2019, picking up to 7.2% in 2020,” the report said. “The downward revision of 0.3 percentage points for both years reflects a weaker-than-expected outlook for domestic demand.”

This latest cut in the forecast follows a series of cuts by the IMF in its previous updates.

In April, the IMF had cut India’s growth forecast for 2019-20 to 7.3%, which was 0.2 percentage points lower than the forecast made in January, which itself was 0.1 percentage points lower than the forecast made in October 2018.

The forecast of 7.2% growth for 2020-21 is 0.5 percentage points lower than what was forecast made in October and January. The 7% forecast for 2019-20, however, is in line with those made by the Reserve Bank of India, Chief Economic Adviser Krishnamurthy Subramanian and the Asian Development Bank.

The IMF has also cut its forecast for world GDP growth by 0.1 percentage point each in 2019 and 2020 to 3.2% and 3.5%, respectively.

The growth forecast for emerging markets and developing economies has also been cut by 0.3 percentage points for 2019 to 4.1% and by 0.1 percentage points for 2020 to 4.7%.