News:The International Monetary Fund(IMF) has released the World Economic Outlook(WEO) Report.
Key takeaways from the report:
- The report has downgraded India’s growth projections to 6.1% in 2019 and 7% in 2020.
- The report has said that the global economy is at its slowest pace of growth at 3%.This is a serious climb down from 3.8% in 2017.
- However,the report has said that the Global growth rate is projected to improve to 3.4% by 2020.
- Further,the growth of advanced economies is projected to slow down by 1.7%
- But the emerging and developing economies are projected to experience a growth pick up from 3.9% in 2019 to 4.6% in 2020.
Why is there a slowdown in growth?
- The higher tariffs and prolonged uncertainty in the trade policy are the major reasons for dented investment and the slowdown in the growth.
- The automobile industry is contracting mainly due to the disruptions from new standard emission standards.This predominantly has an effect in China.
- Further,trade barriers and geopolitical tensions like Brexit is hampering investment, confidence and growth.
What should India do to reverse the slowdown?
- IMF has suggested that the monetary policy and broad-based structural reforms should be used to address cyclical weakness and strengthen confidence.
- A credible fiscal consolidation path is needed to bring down India’s elevated public debt over the medium term.
- This should be supported by subsidy-spending rationalisation and tax-base enhancing measures.
- Further,Governance of public sector banks and the efficiency of their credit allocation needs should be strengthened.
- Land reforms should also be enhanced to encourage and expedite infrastructure development.
International Monetary Fund
- The International Monetary Fund (IMF) is an organization of 189 countries. It was established in 1945.
- The main goal of IMF is to ensure the stability of the international monetary system.
- It also seeks to facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.