‘Ef­fects of global down­turn more pro­nounced in In­dia’

World Eco Wit­ness­ing Syn­chro­nised Slow­down: IMF Chief

The Times of India (New Delhi edition) - - Times Business -

Wash­ing­ton: The largest emerg­ing mar­ket economies like In­dia are ex­pe­ri­enc­ing an even “more pro­nounced” ef­fect of the global down­turn, new IMF chief Kristalina Ge­orgieva has said, warn­ing that the global econ­omy is wit­ness­ing “syn­chro­nised slow­down” which will re­sult in slower growth for 90% of the world this year.

The man­ag­ing di­rec­tor of In­ter­na­tional Mone­tary Fund (IMF) pointed out that the wide­spread de­cel­er­a­tion means that growth this year will fall to its low­est rate since the be­gin­ning of the decade. She said the World Eco­nomic Out­look to be re­leased next week will show down­ward re­vi­sions for 2019 and 2020. The right re­forms in the right se­quence could dou­ble the speed at which emerg­ing mar­kets and de­vel­op­ing economies reach the liv­ing stan­dards of the ad­vanced economies


“In 2019, we ex­pect slower growth in nearly 90% of the world. The global econ­omy is now in a syn­chro­nised slow­down," Ge­orgieva said on Tues­day in her cur­tain raiser speech for the IMF and World Bank’s an­nual meet­ing here next week. The head­line numbers re­flect a com­plex sit­u­a­tion, she said. De­spite this over­all de­cel­er­a­tion, close to 40 emerg­ing mar­ket and de­vel­op­ing economies are fore­cast to have real GDP growth rates above 5% — in­clud­ing 19 in sub-Sa­ha­ran Africa, the IMF chief said.

In the US 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 noted.

The RBI on Fri­day low­ered In­dia’s GDP growth es­ti­mate for the year to 6.1% from the ear­lier fig­ure of 6.9% due to the on-go­ing pe­riod of eco­nomic slow­down.

Ge­orgieva called for us­ing mone­tary pol­icy wisely and en­hanc­ing fi­nan­cial sta­bil­ity. “Now is the time for coun­tries with room in their bud­gets to de­ploy — or get ready to de­ploy — fis­cal fire­power. In fact, low in­ter­est rates may give some pol­icy mak­ers ad­di­tional money to spend,” she said.


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