World Economic Outlook Current Affairs - 2019

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IMF growth Prospects for India: Key Facts

The World Economic Outlook of the International Monetary Fund (IMF) has given the following prospects about the growth trends for India:

  • IMF has retained its growth projection for the country at 7.5 per cent for 2019-20 and said it is likely to accelerate to 7.7 per cent in 2020-21. This brings cheers for India as the world growth rates have been revised downwards.
  • India will remain the fastest-growing economy in the world, at least for the next two years.
  • India’s growth rate is poised to pick up in 2019, benefiting from low oil prices and a slower pace of monetary tightening than previously expected as inflation pressures ease.

The projection by IMF is higher than the Central Statistics Office’s (CSO) estimate of 7.2 per cent and lower than the RBI’s estimate of 7.4 per cent. IMF’s estimates are in line with the World Bank’s estimate of 7.3 per cent.

China’s GDP growth on the decline

The GDP figures from China shows that it recorded its lowest growth rate in 28 years at 6.6 per cent in 2018. IMF had estimated growth rate of 6.6 per cent in 2018 and 6.2 per cent in 2019 and 2020. As a result, India is poised to be the fastest-growing economy in the world, at least for the next two years.

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Policy Priorities proposed in World Economic Outlook to arrest the Downward Growth Trend

The International Monetary Fund in its World Economic Outlook has suggested various policy measures to arrest the downward growth trend. They are:

  • Resolving cooperatively and quickly the trade disagreements which may derail the global trade and addressing the resulting policy uncertainty, rather than further creating harmful barriers and destabilizing an already slowing global economy.
  • Accomplishing the call of G20 leaders to reform the World Trade Organization.
  • Adjusting the fiscal space where it is low in a growth-friendly manner to ensure public debt is on a sustainable path, while protecting the most vulnerable.
  • The monetary policies of advanced economies should continue to normalize carefully by taking necessary steps to address the slowing growth momentum.
  • The IMF also advocates for measures to boost potential output growth and enhance inclusiveness across all economies to broaden the growth.

The World Economic Outlook notes that policy space for countries is more limited than in 2008. As a result, multilateral cooperation will be even more important in the event of a sharper decline in global growth. The IMF notes that it is here the multilateral institutions must be equipped with adequate resources to deal with the rising risks.

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