Washington: The new International Monetary Fund (IMF) Managing Director, Kristalina Georgieva has said that the effect of the global economic slowdown is "more pronounced" in India.
As the global economy is witnessing "synchronized slowdown", the effect is "more pronounced" this year in some of the largest emerging market economies like India, she said. Ms Georgieva, who took over the leadership at the IMF from Christine Lagarde, pointed out that the widespread deceleration means that growth in 2019-20 will fall to its "lowest rate" since the beginning of the decade.
" The global economy is now in a synchronized slowdown. In 2019, we expect slower growth in nearly 90 per cent of the world," said Ms Georgieva in her first speech as managing director of the IMF. Almost 90 per cent of the world will face slower growth, she said on Tuesday.
"In the United States 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. In some of the largest emerging market economies, such as India and Brazil, the slowdown is even more pronounced this year," she said.
The IMF Managing Director said that global trade growth has come to a "near standstill."
The Indian economy is facing a slowdown. The gross domestic product (GDP) growth slowed to 5% in the quarter ended June, the slowest pace it has grown since March 2013, when it expanded 4.7%.
This was the fifth straight quarterly decline in growth. Slowing household demand, which took its toll on other sectors, was one of the major factors for the decline in growth.
In July this year, IMF had projected a slower economic growth for India and cut its projection by 0.3 percentage points for both 2019 and 2020. It said India’s GDP will grow at 7 and 7.2 per cent in 2019 and 2020.
The world economy had been projected to grow by 3.2 percent in 2019 and 3.5 percent in 2020 but Georgieva said on Tuesday that the IMF is cutting its forecasts. The IMF is expected to release details in its updated World Economic Outlook on October 15.
The IMF chief also warned that there could be a loss of around $700 billion by 2020 due the effect of the trade conflicts. “This amount is approximately the size of Switzerland’s entire economy,” she said.
Amid rising trade war between the countries which is generally fought through tariffs and counter-tariffs, the chief called for nations to work together and said: "Everyone loses in a trade war".