IMF Managing Director Kristalina Georgieva said on Thursday that though India has worked on the fundamentals of its economy, there are problems, including long-term drivers of growth that need to be addressed.
"In the financial sector, especially non-banking institutions, there are steps taken now to consolidate banks. They ought to help resolve some of these issues," Georgieva told reporters at a news conference in Washington DC.
Georgieva said there has been " very strong growth" in India over the last years and the IMF is projecting reasonably strong growth for the country. However, "like the rest of the world, India is experiencing a slowdown. So slightly over six per cent is what we expect to see in 2019", she said.
"In India, what is critically important is to continue addressing the long-term drivers of growth. Investment in human capital in India is a top priority. It has to continue bringing women into the labour force. It is very important. India has very talented women, but they stay at home," she said.
Chief IMF Economist Gita Gopinath said rising trade barriers including US-China trade and increasing geopolitical tensions are denting the growth potential.
"The global economy is in a synchronized slow down, and we are, once again, downgrading growth for 2019 to 3 per cent, its slowest pace since the global financial crisis. Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions. We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 per cent by 2020," she said.
Gopinath said the downside risks to growth, trade and geopolitical tensions, including Brexit-related risks, could further disrupt economic activity and "derail an already fragile recovery in emerging market economies and the euro area. She warned this could lead to an "abrupt shift in risk sentiment, financial disruptions and a reversal in capital flows" to emerging market economies.