On January 20, 2020,The International Monetary Fund (IMF),an international organization, in its World Economic Outlook 2020, has reduced India’s economic growth forecast for 2019 to 4.8 % from 6.1% predicted earlier in October 2019. The growth projections have been lowered, citing pressure from non-banking financial companies (NBFCs) and weak income growth in rural India.Key Points:
i.It also estimated the India’s economic growth rate at 5.8 % in 2020 and 6.5 % in 2021. This figure is 1.2 % and 0.9 % less than the previous estimate of the world economic scenario released in October 2019.
ii.Informing about the state of the global economy ahead of the commencement of the World Economic Forum (WEF) annual summit 2020 in Davos, Switzerland, the IMF informed the revision of the global growth rate as well as India’s economic growth forecast.
iii.On the other hand China’s economic growth rate is expected to increase 0.2% to 6 % in 2020 due to the impact of the trade agreement with the US (United States). As per IMF,the domestic demand in India has fallen faster than expected &the reason for this is the pressure in NBFCs and the softening of debt growth.
IMF reduced global growth forecast to 2.9% from 3% for 2019
The IMF has reduced growth estimates for the global economy to 2.9 % in 2019, 0.1 % point lower than its earlier forecast of 3%.
It also predicted the growth estimate 3.3 % in 2020 and 3.4 % for 2021.
Growth forecast of Asia: Due to slowdown in Indian economy, Asia is expected to grow at the rate of 5.6 percent in 2019 to 5.8 percent in 2020 and 5.9 percent in 2021.
i.2020 global growth boom uncertain: As per IMF, the pace of global growth in 2020 is still very uncertain. The reason for this is dependent on the growth outcomes of pressurized economies like Argentina, Iran and Turkey, and the situation of emerging and underperforming developing countries like Brazil, India and Mexico.
About International Monetary Fund (IMF):
Founded– 27 December 1945.
Headquarters– Washington, D.C., United States(US).
Managing Director (MD)- Kristalina Georgieva
Chief Economist– Gita Gopinath.