International Monetary Fund affirms 2.5% growth forecast for Nigeria’s economy in 2020

Andrew Cummings
January 21, 2020

The IMF lowered India's economic growth estimate for the current fiscal to 4.8 per cent and listed the country's much lower-than-expected GDP numbers as the single biggest drag on its global growth forecast for two years.

Global growth is projected to rise from an estimated 2.9 per cent in 2019 to 3.3 per cent in 2020 and 3.4 per cent for 2021, a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021.

"In sub-Saharan Africa, growth is expected to strengthen to 3.5 percent in 2020-21 (from 3.3 percent in 2019)".

The downward revision primarily reflects negative surprises to economic activity in a few emerging market economies, notably India, which led to a reassessment of growth prospects over the next two years.

India is also doing better than the once-roaring Asian tigers of the ASEAN, whose economic growth was estimated at 4.7 per cent last year and is projected to increase to 4.8 per cent this year and 5.1 per cent next year, the International Monetary Fund said. A more subdued growth forecast for India (discussed below) accounts for the lion's share of the downward revisions.

Yesterday, Gita Gopinath, the Chief Economist of the International Monetary Fund said the slowdown in India will have an effect on the global growth story and it has pushed down the global forecast by "0.1 per cent".

The latest edition of the IMF's bi-annual forecast is timed to coincide with the World Economic Forum (WEF)'s annual meeting in Davos, which begins tonight in Switzerland.

India's economy grew just 4.5 per cent in July-September 2019 period -- the weakest pace in almost six years.

The IMF upped its growth forecast for China by 0.2 percentage points for 2020, to 6%.

The fund estimated that the global economy expanded by 2.9 percent previous year, a downward revision of 0.1 percentage points and the slowest pace since the global financial crisis, with trade frictions weighing on exports and investment.

However, few signs of turning points are yet visible in global macroeconomic data. Building financial resilience, strengthening growth potential, and enhancing inclusiveness remain overarching goals.

The IMF also revised down its global growth forecast, mostly because of a sharper-than-expected slowdown in India and other emerging markets, despite a boost in market sentiments caused by a first-phase trade deal between the United States and China.

This fragility remains despite 71 interest rate cuts by 49 central banks worldwide and a return to quantitative easing by the US Federal Reserve and the European Central Bank, what she described as the "most synchronised monetary easing since the global financial crisis". "An important reason for this is the stress in the financial sector, particularly in the non-bank financial sector, because of which there has bee a sharp slowing of credit growth".

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