The International Monetary Fund has cut India’s’ growth forecast for 2019 by 90 bps to 6.1%. This is the second time that the Fund slashed India’s GDP forecast for the year.
In its growth revision, the IMF also cut the global economic growth by 20 basis points to 3%. This is the slowest growth for the world economy since the global economic crisis period of 2007-08.
Rising trade barriers between the US and China and increasing geopolitical tensions in the Middle East are the attributed reasons to the lower global GDP growth.
For the Indian economy, several of the leading institutions have cut down the GDP forecast. Earlier, the World Bank made a sharp cut in its growth forecast for India from 7.5% to 6%.
The RBI also cut its growth prediction to 6.1% for 2019. Earlier estimate of the central bank was 6.9%.
IMF’s projection ratifies the downward trend both in the domestic and world economies. The world economy may suffer from recession in some developed countries and steep slowdown in major emerging markets.
In an earlier assessment, the newly elected IMF Managing Director, Kristalina Georgieva highlighted the slowdown in larger two emerging markets India and China.
She also predicted that 90% of the world economy is likely to have slower growth in 2019.
The sharper growth forecast cut made by the International Monetary Fund indicate that the Indian economy is going through a trough period since the global financial crisis that occurred nearly a decade back.