Indian economy is poised to pick up in 2019: IMF

India's GDP is forecast to expand 7.5% in FY20 and 7.7% in FY21, as per the International Monetary Fund's (IMF) World Economic Outlook Update released by chief economist Gita Gopinath. India will continue to be the world's fastest growing major economy, the report said. "India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease," it added. The update projects global growth at 3.5 per cent in 2019, a downward revision of 0.2 per cent from the October report, and 3.6 per cent in 2020, a reduction of 0.1 per cent. China's growth is seen at 6.2% in both years.

Gita Gopinath, a former adviser to the Kerala government and highly regarded professor at Harvard University, took over as the chief economist of the IMF in January, becoming the first woman to hold the key post in global economic policy-making. She blamed the trade tensions and worsening financial conditions for the bleak outlook. "Higher trade uncertainty will further dampen investment and disrupt global supply chains," she said.

After two years of strong expansion, the world economy is growing more slowly than expected and risks are rising, according to the IMF Christine Lagarde. And even as the world economy continues to move ahead, it is facing significantly higher risks, some of them related to policy, she added.

In her opening remarks, Christine Lagarde at World Economic Outlook Press Conference said that these risks are now increasingly intertwined: think of how higher tariffs and rising uncertainty over future trade policy fed into lower asset prices and higher market volatility. This in turn contributed to tightening financial conditions, including for advanced economies, which is a major risk factor in a world of high debt burdens. In October, the IMF cut its global growth forecast for 2019 and 2020, partly because of the negative effects of rising trade barriers.

However, does that mean that a global recession is around the corner? The answer is 'no'but the risk of a sharper decline in global growth has certainly increased, she said. Add to this geopolitical worries and disappointing long-term growth prospects, and you have an economic picture with a clear message:

Address remaining vulnerabilities and be ready if a serious slowdown were to materialize.

For most countries, this means harnessing the existing growth momentum to create more policy room to act. The goal is to make economies more resilient and more inclusive, and to increase collaboration:

Resilient. Reducing high government debt would open the space needed to fight future downturnsbut this must be done in a fair and growth-friendly way. Monetary policy should be data-dependent, and exchange rates should be allowed to act as shock absorbers. Developing macro prudential toolkits will help further financial sector stability. This also remains the time for economic reforms to lift growth, especially in labor markets and infrastructure investment.

Inclusive. If we are to deliver on the promise of the digital revolutionin terms of productivity, employment, and long-term growththen we must make sure it delivers for people. This includes helping workers displaced by automation, and creating new and better opportunities for women and young people.

Collaboration. Effective international cooperation comes down to fairness, flexibility, and a commitment to the common good. So let us redouble our efforts to resolve shared problemsfrom fixing the global trade system, to fighting corruption and tax evasion, to addressing the existential threat of climate change.

The goal is for us to be in a better position for a downturn, which history suggests is somewhere over the horizon, but also for unexpected developments. The international community must come together to build a brighter future for all citizens. I have called this a new multilateralism. And as our new outlook shows, the need for this kind of cooperation is more urgent than ever.

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