IMF’s Chief Economist Gita Gopinath speaks to NDTV after the global financial institution downgraded US, China’s growth projection.
The IMF now expects the US economy to grow by 6.0% this year, a downgrade from the 7.0% it had forecast in July. China is projected to grow by 8.0% in 2021, a tick down from the 8.1% it had forecast in July.
The International Monetary Fund (IMF) retained India’s growth projection at 9.5 per cent for 2021, after it downgraded the growth rate by three percentage pointsfrom 12.5 per cent in July, following the severe second wave of COVID-19 pandemic in the country.
The Indian economy – which contracted by a record 7.3 percent due to the pandemic, is expected to grow at 8.5 per cent in 2022, according to IMF’s latest World Economic Outlook (WEO) report released on Tuesday.
Here are the Highlights of the conversation:
- We saw consumption flatlining in the US, that’s one of the factors for downgrading US’s growth. The main factor driving that is delta variant – which stopped the momentum and disruption in supplies.
- In US, there is vaccine hesitancy. Everybody knows that we need a much higher vaccination rate.
- On China downgrade: The property regulation was a driving factor. We already had a downgrade earlier this year. But again there are significant risks here.
- The good news is, after the second wave, there is rise in manufacturing. The one area where growth would come from – public investment in infrastructure.
- We do believe that there should be an improvement in fiscal support that is being provided.