Economic Growth Forecast | 24 Jul 2019
According to the IMF’s World Economic Outlook, July 2019, India’s economy will grow at 7% in the year 2019, picking up to 7.2 % in the year 2020.
- In its April Report, International Monetary Fund (IMF) expected India to grow at 7.3% and 7.5% in the year 2019 and 2020 respectively.
- The downward revision of 0.3% for both years is due to weaker-than-expected outlook for domestic demand. However, India will still be the fastest growing major economy of the world.
- Both investment and consumption demand is low in India. This is partly a reflection of the uncertainties associated with the just concluded general elections in India, as well as tightening of borrowing conditions for small and medium enterprises.
- The 7% forecast for the year 2019 is in line with the projections made by the Reserve Bank of India, Chief Economic Adviser and the Asian Development Bank.
- Global growth has been forecast at 3.2% in 2019, picking up to 3.5% in 2020 (0.1 percentage point lower than in the April WEO projections for both years).
- The emerging market and developing economy group is expected to grow at 4.1% in 2019, rising to 4.7% in 2020 ( a cut by 0.3% points for 2019 and by 0.1% points for 2020).
- Reasons: Among the factors cited by the report for the lower growth forecast includes increased trade and technology tensions between the United States and China, prolonged uncertainty on Brexit, and weaker-than-expected activity in emerging market and developing economies.
- Solution: As per the IMF, multilateral and national policy actions are vital to place global growth on a stronger footing. Also, fiscal policy should balance multiple objectives such as smoothing demand as needed, protecting the vulnerable, bolstering growth potential with spending that supports structural reforms, and ensuring sustainable public finances over the medium term.
- If growth weakens relative to the baseline, macroeconomic policies will need to turn more accommodative, depending on country circumstances. Priorities across all economies are to enhance inclusion, strengthen resilience, and address constraints on potential output growth.
World Economic Outlook
- It is a survey by the IMF that is usually published twice a year in the months of April and October.
- It analyzes and predicts global economic developments during the near and medium term.
- It is also updated twice a year, usually in the months of July and October.