New Delhi: The International Monetary Fund (IMF), today, has cut its estimate for the global economy growth to 2.9%. This downgrade is seen as a result of slowdown concerns. The IMF estimate for India is at 4.8%. However, the silver lining is that the IMF projects the Indian economy to slowly rise to 5.8% in the next fiscal and reach 6.5% in 2021.
One of the main reason for global downturn was the US-China trade wars that saw both the countries raising tariffs on hundreds of billions of dollars on each others’ products. Though the actual trade war caused a 0.8% cut in global growth, the uncertainty in the global market caused widespread damage with companies holding of their investments.
Though, the IMF has cut the Indian growth rate, it has projected that the economy will see an upturn in the coming years. The present downturn seems to be the slump in consumption brought about by liquidity crisis by the shadow banking sector.
Interestingly, it must be noted that two of the world’s biggest economies the US and China will witness downturn in their growth in the coming years.
In 2018 the growth rate in US was 2.9% and the expected growth for 2019 is lower at 2.3%. The 2020 fiscal will witness further downturn at 2.0% and is projected to grow only 1.7% in 2021.
For China, which has been witnessing slower growth for the past several years, will continue with slower growth as per IMF predictions. The growth rate estimate is 6.6% and 6.1% in 2018 and 2019 respectively. The projected growth for 2020 and 2021 is estimated to shrink further to 6.0% and 5.8%.
This is here that India is seen scoring above the biggest two economies. Our growth projections by IMF is pegged at 5.8% and 6.5% in 2020 and 2021 respectively.
