A UN report on Friday said continued structural reforms are necessary to boost growth in India, which is currently facing an economic slowdown.
The World Economic Situation and Prospects 2020 (WESP) report has also lowered GDP growth estimate for India while expressing hope that combination of fiscal stimulus and financial sector reforms will help boost consumption.
“After experiencing a sharp economic slowdown from 6.8 per cent in 2018 to 5.7 per cent in 2019, India has committed to an ambitious fiscal expansion to complement the country’s already loose monetary policy.
“The combination of fiscal stimulus and financial sector reforms, boosting investment and consumption, is expected to support a recovery in growth to 6.6 per cent, but it will take continued structural reforms to bring India’s growth back to its previous levels,” it said.
However, the data related to India was revised to 5 per cent for the current fiscal and 5.8-5.9 per cent for the next financial year, Nagesh Kumar, Head, UN Economic and Social Commission for Asia and the Pacific, said.
While presenting the report, he said the GDP forecast in WESP did not take into account the latest growth numbers released by India’s National Statistical Office (NSO).
The report, he said was computed in October 2019 and NSO’s advanced growth estimates were released in January 2020 suggesting country’s growth would slip to 5 per cent during 2019-20 fiscal.
Kumar further said India’s macro economic fundamentals are strong as ever and recovery in growth is expected in the next fiscal.
According to the UN study, one in five countries will see per capita income stagnate or decline this year, but listed India among few countries where the per capita GDP growth rate could exceed 4 per cent level in 2020.
A prolonged weakness in global economic activity may cause significant setbacks for sustainable development, including the goals to eradicate poverty and create decent jobs for all. At the same time, pervasive inequalities and the deepening climate crisis are fuelling growing discontent in many parts of the world.
In the European Union, manufacturing will continue to be held back by global uncertainty, but this will be partially offset by steady growth in private consumption, allowing a modest rise in GDP growth from 1.4 per cent in 2019 to 1.6 per cent in 2020.
Despite significant headwinds, East Asia remains the world’s fastest growing region and the largest contributor to global growth, as per the report.
In China, GDP growth is projected to moderate gradually from 6.1 per cent in 2019 to 6.0 per cent in 2020 and 5.9 per cent in 2021, supported by more accommodative monetary and fiscal policies.
“Growth in other large emerging countries, including Brazil, India, Mexico, the Russian Federation and Turkey, is expected to gain some momentum in 2020,” the UN report said.
As the global economic balance is shifting from the EU, the US and other developed countries towards China, India and other developing countries, global economic decision-making power is shifting as well, it noted.
“Global cooperation mechanisms will need to recognise this shifting balance while continuing to allow the under represented to be heard,” it added.
The UN report also said that eradicating poverty will increasingly rely on tackling inequality going forward.