India and China are presently tied in terms of economic growth rate, even though New Delhi’s projected growth rate for 2019-20 is 6.1 percent, says IMF Chief Economist Gita Gopinath. The WEO is a survey published by the IMF twice a year. It presents IMF analysis of global economic developments during the near and medium term.
The IMF’s WEO has revealed the Indian economy can be expected to have a growth rate of seven percent in 2020-21 despite budget cuts in 2019-20.
The IMF’s growth rate projection, however, contrasts with the assessment by the World Bank, which says India faces considerable challenges in terms of its development strategies. The World Bank said India has been achieving a consistent 7%-plus growth rate annually over the last 15 years and has been successful in halving its poverty rate.
But areas that need attention include agriculture, water management, job creation, the modernisation of public sector institutions and arresting the drop in the female labour force.
Explaining the cut in growth projections for India, the WEO said: "India's economy decelerated further in the second quarter, held back by sector-specific weaknesses in the automobile sector and real estate as well as lingering uncertainty about the health of non-bank financial companies."
"Corporate and environmental regulatory uncertainty" were other factors that were weighing on demand, it added.
The IMF said the projected 6.1 percent growth rate for 2019-20 is consistent with the forecast of the Monetary Policy Committee of India’s central bank.
IMF Chief Economist Gopinath said: "The global economy is in a synchronised slowdown, with growth for 2019 downgraded again - to 3 percent - its slowest pace since the global financial crisis (in 2007-08).”
“This is a serious climb down from 3.8 percent in 2017, when the world was in a synchronised upswing," she added.
China's economic growth was expected to be pegged at 5.8 percent next year, the WEO revealed.
The global slowdown has been blamed on rising trade barriers, uncertainty surrounding trade and geopolitics, and structural factors, such as low productivity growth and an aging population in developed countries.