IMF cuts India's GDP estimate by 130 basis points to 4.8 percent for 2019-20

Source: Xinhua| 2020-01-20 23:48:12|Editor: Mu Xuequan
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MUMBAI, Jan. 20 (Xinhua) -- International Monetary Fund (IMF) has cut India's gross domestic product (GDP) growth for 2019-20 by 130 basis point to 4.8 percent that accounted for the lion's share of the downward revision in global forecast, IMF said in its World Economic Outlook, released Monday.

"(India's) domestic demand has slowed more sharply than expected amid stress in the non-bank financial sector and a decline in credit growth," the report said.

In December at an event in Mumbai, IMF's India born chief economist Gita Gopinath had indicated that it may significantly downgrade the country's forecast in January.

Attributing the current slowdown in Asia's third largest economy to stress in the non-bank financial sector and weak rural income growth, the IMF outlook has also revised its estimates for 2020-21 downward by 120 basis points to 5.8 percent before growth picks up to 6.5 percent in 2021-22, supported by monetary and fiscal stimulus as well as subdued oil prices.

Despite downward revision, IMF's projection for the current fiscal is marginally higher than credit rating agency Fitch's estimate but lower than India's Central Statistics Office, Reserve Bank of India, United Nations and World Bank, according to analysts with a domestic brokerage.

Global growth is projected to rise to 3.3 percent in 2020 and 3.4 percent for 2021 from an estimated 2.9 percent in 2019 - a marginal decline of 0.1 percentage point for 2019 and 2020 and 0.2 percentage point for 2021 from its October update in World Economic Outlook.

"The downward revision (in global growth) primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years," the report said.

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