IMF Cuts World Economic Growth Outlook; Raises India Forecasts To 7.5%

Owing to weakness in emerging economies and Europe, on January 21, the International Monetary Fund has reduced its world economic growth forecasts for 2019 and 2020. The projection for India for the ongoing year was however raised to 7.5%, with an increase of 10 basis points.

"India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease," IMF said in its latest World Economic Outlook update.

In comparison to what was predicted in October, the IMF for the year 2019 and 2020 has placed its forecasts at 3.5% and 3.6%, respectively.

In respect of India, growth estimate for the previous year i.e. 2018 and 2020 has been retained at 7.3% and 7.7%, respectively.

Also, with another downgrade in 3 months for China and a no-deal Brexit, there are concerns lingering that policymakers at the Davos meet may need to come up with solution to deal with economic slowdown crisis.

"Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook," the IMF said in an update to its World Economic Outlook report.

"Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth."

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