New Delhi: Come next week, the International Monetary Fund (IMF), in its World Economic Outlook, may sharply revise downward its growth forecast for India, close on the heels of Asian Development Bank (ADB) and the Organisation for Economic Cooperation Development (OECD).
The new IMF managing director Kristalina Georgieva on Wednesday said the global economy was witnessing “synchronized slowdown" and its effect is “more pronounced" in emerging markets like India.
Georgieva said growth in 2019-2020 will fall to its lowest rate since the beginning of the decade due to widespread deceleration. “In the United States and Germany, unemployment is at historic lows. In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year," she added.
IMF had pared down its 2019-20 growth forecast for India in July by 30 basis points to 7%, expecting weaker domestic demand to limit an economic recovery.
Last month, ADB and OECD revised their for FY20 growth forecasts downward for India by 50 basis points and 1.3 percentage points to 6.5% and 5.9%, respectively. Last week, the Reserve Bank of India also slashed its growth projection for the economy by 80 basis points to 6.1% for 2019-20. Rating agency Standard Poor’s has also pared down its India growth forecast for the year to 6.3% from 7.1% earlier.
The Indian economy is battling a severe demand slowdown and liquidity crunch which resulted in economic growth rate falling to a six-year low of 5% in the June quarter, while growth in private consumption expenditure slumped to an 18-quarter low of 3.1%.