India's growth to accerate from 7.4% to 7.6% in FY20: UN

With robust private consumption and 7.4 per cent GDP growth rate in the current fiscal, the Indian economy is expected to accelerate at a rate of 7.6 per cent in 2019-20, according to a report by the United Nations.

"Economic growth continues to be underpinned by robust private consumption, a more expansionary fiscal stance and benefits from previous reforms," said the report titled United Nations' World Economic Situation and Prospects (WESP) 2019.

It added that a more robust and sustained recovery of private investment remains a crucial challenge to uplifting medium-term growth.

This is in reference to sustained slowdown in domestic private investment owing to various factors such as the massive accumulated non-performing assets (NPAs or bad loans) of banks, highly leveraged corporates and a general credit crunch.

The WESP report said global economy will continue to grow at a steady pace of around 3 per cent in 2019 and 2020. However, a worrisome combination of development challenges could further undermine growth.

"The global economy is facing a confluence of risks, which could severely disrupt economic activity and inflict significant damage on longer-term development prospects. These risks include an escalation of trade disputes, an abrupt tightening of global financial conditions, and intensifying climate risks," it said.

Amid the rise in global trade tensions, the world trade growth moderated over the course of 2018 to 3.8 per cent from growth of 5.3 per cent in 2017.

While tensions have materially impacted some specific sectors, stimulus measures and direct subsidies have so far offset much of the direct economic impacts on China and the United States. "But a prolonged escalation of trade tensions could severely disrupt the global economy," said the WESP report.

Directly impacted sectors have already witnessed rising input prices and delayed investment decisions. These impacts can be expected to spread through global value chains, particularly in East Asia.

Slower growth in China and the United States could also reduce the demand for commodities, affecting commodity exporters from Africa and Latin America.

The report said China's growth is estimated to decelerate to 6.3 per cent in 2019 from 6.6 per cent in 2018. It may further go down to 6.2 per cent in 2020.