Budget 2020 India: The International Monetary Fund (IMF) on Monday cut India’s GDP outlook for FY20 by 130 bps to 4.8 per cent as against 6.1 per cent in October 2019. The cut was announced as the domestic demand has slowed more sharply than it was expected. IMF further cut down GDP growth estimated for FY21 to 5.8 per cent as compared to earlier predicted 7 per cent, down by 120 bps. The government’s first advance estimates already revised India’s growth to 5 per cent in FY20. The new projections estimate global growth at 2.9 per cent in 2019, 3.3 per cent in 2020 and 3.4 per cent in 2021. Considering the stress in the NBFC sector and a decline in credit growth, the IMF stated the negative surprises in emerging markets like India have also contributed to the decline in global growth estimates. Monetary and fiscal stimulus paired with subdued oil prices, on the other hand, is expected to remain as economic growth supporters in India. Finance Minister Nirmala Sitharaman is slated to announce budget on February 1, 2020.
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The world has not reached a turning point yet, slightly revising downward our growth outlook for the global economy, IMF added. The fundamental issues of reform in trade systems still remain there along with some developments in the Middle East, IMF chief Kristalina Georgieva said. The policymakers should keep doing what works and that’s the simplest advice to them, said the IMF chief. Everyone must be ready to act again and immediately in a coordinated manner if growth begins to slow down again, IMF chief also said.
IMF’s Chief Economist Gita Gopinath said some risks have partially receded since October with developments on US-China trade deal. The slight downward revision of 0.1 per cent for two years and 0.2 per cent for the year after that in the global growth is largely due to downward revision for India estimates, she said.
Meanwhile, on the global front, the economy is receiving a significant boost, 0.5 percentage point of growth last year and this year – from central banks’ low-rate policies, the lending organization says in a global outlook report out Monday
Source: Financial Express
