Context :

• Recently IMF’s 2019 World Economic Outlook (WEO) has been released.

India’s Outlook

• The International Monetary Fund cut its estimate for India’s growth this year to 6.1% from 7% projected in July, calling on the country to use monetary policy and broad-based structural reforms to address cyclical weakness and strengthen confidence.
• “India’s economy is set to grow at 6.1% in 2019, picking up to 7% in 2020

Recommendations of WEO:

• The WEO recommended broad based structural reforms to strengthen confidence and address cyclical weakness.
• The report called for a “credible fiscal consolidation path” over the medium term to bring down elevated public debt, supported by measures to enhance the tax base and rationalize subsidy-spending.
• The report also recommended “reforms to hiring and dismissal regulations” to help incentivize job creation and “land reforms …to encourage and expedite infrastructure development.” It called for a strengthening of governance of public sector banks and greater efficiency of their credit allocation.

Global Outlook scenario:

• IMF downgrading global growth in 2019 to 3%, the slowest since the global financial crisis.
• Globally, rising trade barriers, heightened uncertainty around trade and geopolitics, idiosyncratic factors that have strained several emerging markets and structural factors such as advanced economies’ ageing population and low productivity growth were the causes behind a “synchronized slowdown
• The IMF projected the U.S. would grow at 2.4% and 2.1% in 2019 and 2020 respectively – marginally revised upwards by 0.1 and 0.2 percentage points respectively from April projections. 
• For China, growth was projected to grow at 6.1% and 5.8% in 2019 and 2020 (down from 6.3% and 6.1% April projections) due to escalating tariffs and weakening external demand.

Source: Indian Express