Gita Gopinath of the International Monetary Fund (IMF) said that India would have an effect on the global growth story. She further maintained that India had already pushed the global forecast down by 0.1%. She’s the Chief Economist of the IMF.
India projection of IMF
The world body has slashed India’s growth forecast in its World Economic Outlook released in Davos, Switzerland. It sees India’s growth to remain at 4.8% but it is 1.3% lesser in three months. Ms. Gopinath said that IMF revised the global growth down for 2019 by 0.1% considering the size of the Indian economy and its impact on global growth. She further said that the vast majority of the downgrade was from India.
Issue with India growth
Ms. Gopinath minced no words in highlighting the issue ailing the Indian economy. She said that the biggest issue was in the financial space. She indicated the stress in the financial sector, especially in non-bank financial corporations. The weakness in credit growth is visible and there appears to be an increased risk in lending in the markets. Also, there had been a weakness in rural income growth. But there was the hope of recovering GDP by up to 6.5% by 2021. The monetary and fiscal stimulus and subdued oil prices could support growth.
IMF on social unrest
The IMF report highlighted the link between social unrest and the erosion of trust in established institutions. Also, there was a lack of representation in governance structures. Ms. Gopinath said that nations should protect the vulnerable so that they weren’t left behind in the growth story.