India's Growth Rate Sharply Revised Down from 7% to 5.8%
"Korea's Expansionary Fiscal Policy Contributes to Global Economic Stability"
[Asia Economy Reporter Kim Hyunjung] The International Monetary Fund (IMF) has revised down this year's global economic growth rate by 0.1 percentage points from its October forecast last year to 3.3%. This figure reflects the poor performance of some emerging countries, including India. The IMF also mentioned expansionary fiscal policies in countries such as China, the United States, and South Korea, evaluating that these contributed to stabilizing the global economy.
On the 20th (local time), the IMF announced a revision of the World Economic Outlook, lowering the global economic growth rate for last year to 2.9% and for this year to 3.3%, each down 0.1 percentage points from the October forecast last year. For 2021, the growth rate was revised down by 0.2 percentage points from the previous forecast to 3.4%. The IMF judged that the previously expected global economic recovery would continue but at a somewhat slower pace.
This revision reflects the poor performance of emerging countries including India. According to the revised growth forecasts for related countries announced on the same day, the IMF lowered India's economic growth rate for this year from 7% in October last year to 5.8%, a decrease of 1.2 percentage points. Mexico, Saudi Arabia, and South Africa were also revised down by 0.3 percentage points each to 1.0%, 1.9%, and 0.8%, respectively. In contrast, China's growth forecast was revised up by 0.2 percentage points from 5.8% to 6.0%. South Korea's growth forecast was not included in this announcement.
The IMF evaluated factors improving market sentiment such as ▲ tentative signs of bottoming out in manufacturing and global trade ▲ the spread of accommodative monetary policies ▲ progress in US-China trade negotiations ▲ reduced risk of a no-deal Brexit, while also explaining that ▲ heightened geopolitical risks such as US-Iran tensions and increased social unrest ▲ deteriorating relations between the US and its trading partners ▲ potential weakening of financial market sentiment are acting as downward pressures. Along with the spread of accommodative monetary policies, the IMF mentioned South Korea, China, and the United States as countries whose expansionary fiscal policies contributed to stabilizing the global economy.
By country, the IMF lowered growth forecasts for the United States, the Eurozone, the United Kingdom, and Hong Kong, expecting advanced economies to grow by 1.6% and emerging economies by 4.4% this year. These figures are down 0.1 and 0.2 percentage points, respectively, from the October forecast last year. The growth rate for advanced economies next year was maintained at the previous forecast of 1.6%, while emerging economies were revised down by 0.2 percentage points to 4.6% compared to last year's forecast.
The IMF recommended that multilateral cooperation and domestic policy implementation by each country are necessary for global economic recovery. The IMF stated, "Strengthening international cooperation, including building a rules-based trading system, is necessary," and added, "Countries with fiscal and monetary policy space should pursue a balanced macroeconomic policy mix to respond to downside risks."
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