IMF chief says growth slowdown in India is temporary
The chief of the International Monetary Fund, Kristalina Georgieva, said on Friday that the economic slowdown in India is temporary. The IMF chief was speaking at the World Economic Forum 2020 in Davos, Switzerland. Georgieva's statement comes days after the IMF blamed India's economic slowdown for dragging down global growth projections for the years 2019 and 2020. Here are more details.
Speaking at WEF 2020, Georgieva said, "We had a downgrade in one large market India, but we believe that's temporary." She added, "We expect the momentum to improve further going ahead. There are also some bright spots like Indonesia and Vietnam." The IMF chief also said that several African nations are doing well, while countries like Mexico are not.
Georgieva said global growth is in a better place in January now that the United States has signed the first phase of a trade deal with China. She said other factors such as synchronized tax cuts are also driving the positive momentum. However, Georgieva noted, "[3.3%] is still sluggish growth," adding that more aggressive fiscal policies, structural reforms, and more dynamism is required.
Speaking on risks to the global economy, Georgieva said, "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." The IMF chief listed factors such as low inflation and weakness in long-term productivity growth. Separately, she also noted that emerging markets are moving forward.
In its January assessment, the IMF estimated India's growth rate at 4.8% for FY19-20. It also lowered the global growth projections by 0.1% as compared to forecasts made in October. The growth projections for 2019 and 2020 were revised at 2.9% and 3.3% respectively. "A more subdued growth forecast for India accounts for the lion's share of the downward revisions," the IMF had said.