World Economic Outlook 2019 Report: India’s growth estimate to 6.1%
The International Monetary Fund (IMF) has released its biennial report – World Economic Outlook on October 15. The report indicates that over the past year, global growth has fallen sharply. For advanced economies, growth is projected to soften to 1.7 percent in 2019 and 2020. However, India’s GDP growth has been estimated at 6.1 percent.
The IMF Report indicates that Global growth in 2020 will improve to 3.4 percent, a downward revision of 0.2 percent from our April projections. IMF releases that this recovery is not broad-based and are precarious, unlike the synchronized slowdown. It also projected a slow for advanced economies to 1.7 percent in 2019 and 2020.
India Specific Findings
• India’s GDP growth will touch a mark of 6.1% in 2019 while it will go up to 7% in 2020.
• India’s sharpest cut in the economy is next to Saudi Arabia’s 1.7 percent in 2019 and 2020
• The report suggests that India’s trade volume has reached its lowest level since 2012. Also, It has reduced by 1% since 2012.
• The report highlights that India’s economic growth softened in 2019 because corporate and environmental regulatory uncertainty, together with concerns about the health of the nonbank financial sector, weighed on demand.
• Developing economies such as Brazil, India, China, Mexico and Russia and some other countries are suffering from macroeconomic and financial stress.
India halved its poverty rate: World Bank
The World Bank has released a statement on October 15 that India has halved its poverty rate since the 1990s and achieved a seven-plus growth rate over the last 15 years. The World Bank also mentioned that India enjoyed strong improvements in most human development outcomes in last 15 years. Along with this, the World Bank recommended that India will need to achieve greater resource efficiency to keep its growth rate on the right track.
• The global economy witnessed a slowdown due to weak business confidence between USA and China.
• After a sharp decline in the second half of 2018, growth in the advanced countries stabilized in the first half of 2019.
• The German economy contracted in the second quarter as industrial activity slumped.
• IMF report recommends that monetary policy and broad-based structural reforms should be used to address cyclical weakness and strengthen confidence in India.
• Apart from other measures, a credible fiscal consolidation path is required to bring down India’s elevated public debt over the medium term.
• Some steps should be supported by subsidy-spending rationalization and tax-base enhancing measures.
• Public sector banks and their credit allocation need strengthening, and role of the public sector in the financial system needs to be reduced.
• Reforms are also required for hiring and dismissal regulations because it would help incentivize job creation and absorb the country’s large demographic dividend.