India Responsible for Slashed Global Growth Estimate: IMF Chief

As the International Monetary Fund (IMF) cut downglobal growth forecasts owing to the economic slowdown in India and otheremerging markets, the chief economist of IMF, Gita Gopinath said that India wasprimarily responsible for the downgrade in global growth.

Speaking about the lowered world growth estimates,Gopinath said, "We have projected global growth at 2.9 per cent for 2019and 3.3 per cent for 2020 which is 0.1 percentage point lower than the Octoberestimates. The vast majority of it comes from our downgrade for India which wasquite significant for both years."

When asked the extent to which the economic slowdownin India had impacted global forecasts, Gita Gopinath said, "Simplecalculation says it would be over 80 per cent."

The IMF on Monday also loweredIndia's economic growth estimate for the current fiscal to 4.8 per cent. Gopinath,when spoke about the slashed projections said, "The first two-quarters ofIndia came in weaker than we projected. One sector where we are seeing the moststress is the financial sector — the non-bank financial corporations. We haveseen a sharp decline in credit growth and a weakened business sentiment. Allthis led to the revised numbers."

However, India's growth(estimated at 4.8 per cent in 2019) is projected to improve to 5.8 per cent in2020 and 6.5 per cent in 2021.

Gita Gopinath, while talking about the road torecovery for India's economy said, "We see India recovering. There is asignificant recovery coming in the next fiscal year. There is a fair amount ofmonetary stimulus in the system, corporate tax cuts are also there — theseshould help with recovery in growth."

According to Gopinath, the biggest task before thegovernment is to restimulate growth without furthering the non-performingassets (NPAs) problem.

However, she added that India also needs stronggovernance reforms.