IMF chief calls India’s growth slowdown temporary

Kristalina Georgieva

Kristalina Georgieva   | Photo Credit: AFP

“We had a downgrade in one large market—India—but we believe that’s temporary. We expect momentum to improve further going ahead,” IMF Chief Kristalina Georgieva said.

IMF chief Kristalina Georgieva on Friday said growth slowdown in India appears to be temporary and that she expects the momentum to improve going ahead.

The world appears a better place in January 2020 compared to what it was when IMF announced its World Economic Outlook in October 2019, she said at the World Economic Forum (WEF) 2020 here.

She said the factors driving this positive momentum include receding trade tension after the U.S.-China first phase trade deal and synchronised tax cuts, among others.

She, however, said 3.3% is not a fantastic growth rate for the world economy.

“It is still sluggish growth. We want fiscal policies to be more aggressive and we want structural reforms and more dynamism,” the Managing Director of the International Monetary Fund (IMF) said.

On Monday, the IMF lowered growth estimate for the world economy to 2.9% for 2019, citing “negative surprises” in few emerging market economies, especially India.

The IMF also revised downwards its forecast for India to 4.8% for 2019-20.

Regarding emerging markets, Ms. Georgieva on Friday said they are also moving forward.

“We had a downgrade in one large market—India—but we believe that’s temporary. We expect momentum to improve further going ahead. There are also some bright spots like Indonesia and Vietnam,” she noted.

According to her, a number of African countries are doing very well, but some other nations like Mexico are not.

On risks ahead for the global economy, the IMF chief listed factors like weakness in long-term productivity growth and low inflation.

“We are living in a more risk-prone world. It is only January and there have been events that are sparking risks for the global economy,” she added.

Releasing an update to its World Economic Outlook (WEO) on Monday, the IMF had said global growth, estimated at 2.9% in 2019, is projected to increase to 3.3% in 2020 and inch up further to 3.4% in 2021.

Compared to the October WEO forecast, the estimate for 2019 and the projection for 2020 represent 0.1% reduction for each year while that for 2021 is 0.2% lower.

“A more subdued growth forecast for India... accounts for the lion’s share of the downward revisions,” it had said.

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Printable version | Feb 20, 2020 7:10:22 AM |

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