India stays world's topperforming economy

India remains the world's topperforming major economy with a growth rate of 7% for the current fiscal year despite a second cut in projections this year by the International Monetary Fund (IMF). The IMF growth projection matches the 7% made in May by the UN for 2019 and is slightly lower than the UN's 7.1% for 2020.

The World Economic Outlook (WEO) Update released in Santiago, Chile, by Chief Economist Gita Gopinath, projects the Indian economy's growth rate to increase to 7.2 percent next financial year. The cut in growth projection for both years was 0.3 percent from that made in April and it was attributed to “a weaker-than expected outlook for domestic demand”.

The April WEO had cut the earlier growth projection by 0.2 percent for this and next financial years. The 7% growth rate for this year is higher than the 6.8% last year.

India's growth rate is more than double the growth projection for the global economy, which the IMF said would be 3.2% for this year and 3.5% for the next.

Gopinath said the IMF expected to see some improvement in investment and consumption in India “in the near term and that, along with a more accommodative monetary policy and fiscal policy of the Indian government, should remove some of the downside risks”. Explaining the reason for the cuts, she said, “there was weakness that was fairly broad-based in investment and in consumption in the first quarter of this year. Some of this was a reflection of the run-up to the elections and the uncertainties associated with that. There was also some tightening of financial conditions, especially for small and medium enterprises,” she said.

China's growth rate for this year is projected to be 6.2% this year and to go down to 6% next year. For both years, the IMF cut the April projections by 0.1%.