‘Synchronised’ slowdown to hit India, says new IMF chief

WASHINGTON: International Monetary Fund chief Kristalina Georgieva on Tuesday said the world’s largest emerging market economies such as India are experiencing a “more pronounced” effect of “synchronised slowdown” across most of the global economy.

“In 2019, we expect slower growth in nearly 90% of the world. The global economy is now in a synchronised slowdown,” Georgieva said in her curtainraiser speech for the IMF and World Bank’s annual meeting in Washington next week.

The Reserve Bank of India last week lowered India’s GDP growth estimate for the year to 6.1% from the earlier figure of 6.9%. This was the sharpest reduction in projected GDP growth rates by the central bank’s Monetary Policy Committee (MPC) since its inception in October 2016.

The MPC report also pointed towards a slowdown in private

consumption, flow of funds to the commercial sector and economic headwinds from global uncertainties even as it hinted that the Indian economy had bottomed out and a recovery might be underway.

The Indian economy has been losing momentum for five consecutive quarters, with GDP growth reaching a six-year low of 5% in the June quarter.

Georgieva, in her first speech as managing director of the IMF, said that widespread deceleration means that global growth this year will fall to its lowest rate since the beginning of the decade. She added that the Fund is cutting its forecasts for global growth in 2019 and 2020.

IMF is due to release details in its updated World Economic Outlook on October 15. Previously, the world economy had been projected to expand by 3.2% in 2019 and 3.5% in 2020.

In the United States and Germany, unemployment is at historic lows. Yet across advanced economies, including in the US, Japan and especially the Euro area, there is a softening of economic activity, she said.

“In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year. In China, growth is gradually coming down from the rapid pace it saw for many years,” Georgieva said. The precarious outlook presents challenges for countries already facing difficulties, including some of the Fund’s programme countries, she said.

Georgieva further called for using monetary policy wisely and enhancing financial stability.