India 'biggest contributor' to downward revision in global growth: IMF's Gita Gopinath

International Monetary Fund (IMF) Chief Economist Gita Gopinath, on January 20, said India is the biggest contributor to the downward revision in growth projections for emerging market and developing economies.

In a blog post on the IMF's website, she said that while there are signs of stabilisation, the global growth outlook remains sluggish and there are no clear signs of a turning point. There is simply no room for complacency, the IMF chief added, emphasising the need for  stronger multilateral cooperation and national-level policies to support a sustained recovery.

"For emerging market and developing economies, we forecast a pickup in growth from 3.7 percent in 2019 to 4.4 percent in 2020 and 4.6 percent in 2021, a downward revision of 0.2 percent for all years. The biggest contributor to the revision is India, where growth slowed sharply owing to stress in the non-bank financial sector and weak rural income growth," the IMF said in its latest World Economic Outlook report .

It added that while the global growth is expected to increase modestly from 2.9 percent in 2019 to 3.3 percent in 2020, and 3.4 percent in 2021, the slight downward revision in the projected numbers as compared to those in the October World Economic Outlook, "is owed largely to the downward revisions for India".

"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."

It added that in a few cases, this reassessment also reflects the impact of increased social unrest.

The IMF also said that the global growth outlook for 2020 continues to remain highly uncertain as global growth relies on improved growth outcomes for stressed economies like Argentina, Iran, and Turkey and for underperforming emerging and developing economies such as Brazil, India and Mexico.

"Weakness in credit growth is the main reason behind IMF's growth forecast cut for India," IMF's Chief Economist Gita Gopinath told CNBC-TV18 in an interview. She added that while there is a fair amount of stimulus vis-a-vis the fiscal policy measures and the rate cut by the Reserve Bank of India, the effect of the corporate tax cut will take a while to reflect in the economy.