IMF cuts India's growth rate to 4.8%, calls it 'negative surprise'

Davos, January 20

The International Monetary Fund has lowered India’s growth estimate for 2019 sharply to 4.9 per cent, and called it one of the "negative surprises" last year.

The latest cut follows a downward trend which reduced India's growth to 6.1 per cent in October.

IMF's World Economic Outlook (WEO) blamed India's economic slowdown for a "lion's share" of the 0.1 per cent cut in the global economic growth projections for last year to 2.9 per cent and to 3.3 per cent for the current year from those made in October.

It also cut the global economic projections for 2021 by 0.2 per cent to 3.4 per cent.

"A more subdued growth forecast for India accounts for the lion's share of the downward revisions," the IMF said.

The IMF has also projected the country’s growth in 2020 at 5.8 per cent and in 2021 at 6.5 per cent. It projects India to be the second fastest-growing major economy this year and the next, behind China's 6.1 this year and 6.4 next year.

“A more subdued growth forecast for India accounts for the lion's share of the downward revisions," the IMF said.

It also projected slower growth rate globally—its new projections estimate growth at 2.9 per cent in 2019, 3.3 per cent in 2020 and 3.4 per cent in 2021.

Ahead of the inaugural of the World Economic Forum (WEF) annual summit here, IMF Managing Director Kristalina Georgieva said the fund’s simplest advice to policymakers is that they should keep doing what works.

She cautioned that everyone must be ready to act again and immediately in a coordinated manner if growth begins to slow down again.

Noting that a turning point is yet to be reached, the IMF said it was slightly revising downwards the growth outlook for the global economy.

Fundamental issues of reform in trade systems still there and we have seen there have been some developments in the Middle East, Georgieva.

IMF’s Chief Economist Gita Gopinath said some risks have partially receded since October with developments on US-China trade deal.

The slight downward revision of 0.1 per cent for two years and 0.2 per cent for the year after that in the global growth is largely due to downward revision for India estimates, she said. Agencies