International Monetary Fund chief Kristalina Georgieva on Friday said the economic slowdown in India appeared to be temporary and the momentum could improve in the months to come, PTI reported. Georgieva made the remarks at the World Economic Forum in the Swiss resort of Davos, days after the IMF lowered the global growth projection for 2019 and 2020 because of sharper-than-expected slowdown in India.
“It is still sluggish growth [for the global economy],” said the IMF managing director. “We want fiscal policies to be more aggressive and we want structural reforms and more dynamism. 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.”
The leader of the world body said weakness in long-term productivity growth and low inflation posed risks for the global economy. “We are living in a more risk-prone world,” she added. “It is only January and there have been events that are sparking risks for the global economy.”
In its recent assessment, the monetary fund said the Indian economy was estimated to grow 4.8% in 2019-’20, with an improvement to 5.8% in 2020-’21 and 6.5% in 2021-’22. India’s “domestic demand has slowed more sharply than expected amid stress in the nonbank financial sector and a decline in credit growth”, the IMF said.
After the recent assessment was released, IMF Chief Economist Gita Gopinath told a news channel that the International Monetary Fund would take into account the widespread protests against the Citizenship Amendment Act and the proposed National Register of Citizens in its next assessment for India in April.
“Given the size of the Indian economy in the global GDP right now, if you have a significant downward revision for India, then it does have an impact on global growth,” Gopinath added. “So we revised global growth down for 2019 by 0.1% and the vast majority of that comes from the downgrade for India.”