IMF Managing Director Christine Lagarde warned that the chances of a slowdown in global growth had increased multifold, even if recession was not yet around the corner.
While the growth of the global economy is forecast to dip, India will maintain its lead as the world’s fastest-growing major economy as it picks up pace next year, said the International Monetary Fund (IMF).
It estimated India growth rate at 7.5 per cent in FY20 and 7.7 per cent in FY21. However, China’s growth is seen at 6.2 per cent in both years.
“India’s economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease,” the IMF was quoted as saying, in its update of the flagship World Economic Outlook released in Davos.
“Global expansion has weakened,” it said. Global growth for 2018 is estimated at 3.7 per cent, as in the October World Economic Outlook, despite weaker performance in some economies, notably Europe and Asia.
IMF Managing Director Christine Lagarde warned that the chances of a slowdown in global growth had increased multifold, even if recession was not yet around the corner. Speaking at the World Economic Forum in Davos on Monday, she urged policymakers across economies to address economic vulnerabilities, especially by reducing high government debt.
IMF chief economist Gita Gopinath too observed that escalation of trade tensions and a worsening of financial conditions are key sources of risk and called for policymakers to act.
“Higher trade uncertainty will further dampen investment and disrupt global supply chains. A more serious tightening of financial conditions is particularly costly, given the high levels of private and public sector debt in countries… Given this backdrop, policy makers need to act now to reverse headwinds to growth and prepare for the next downturn,” she was quoted as saying.
Gopinath said the monetary policy in advanced economies should continue to be normalised carefully. “The major central banks are keenly aware of the slowing momentum—and we expect they will calibrate their next steps in line with these developments,” she added.
In its recently released annual Global Economy Watch, PwC projected India's real GDP growth at 7.6 per cent in 2019 and 7.7 per cent the following year.
Source: ET, media reports