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UN revises growth forecast to 5 per cent for India in current fiscal

Its estimate for FY21 was also further downgraded to 5.8%-5.9% from 6.6% in the report, said Nagesh Kumar, head of the UN economic and social commission for Asia and the Pacific, while presenting the report in Delhi. Since the report was finalised in October it did not take into account the second quarter results and hence the outlook has been revised, Nagesh Kumar said.

, ET Bureau|
Last Updated: Jan 17, 2020, 05.43 PM IST
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Economic growth
In terms of policy recommendations for a slowing global economy, the report calls for an end to the reliance on monetary policy and advocated for more fiscal measures.
The United Nations (UN) has revised its forecast for India’s growth in the current fiscal to 5% on Friday, down from 5.7% it had mentioned in its World Economic Situation and Prospects (WESP) 2020 report released on Thursday.

Its estimate for FY21 was also further downgraded to 5.8%-5.9% from 6.6% in the report, said Nagesh Kumar, head of the UN economic and social commission for Asia and the Pacific, while presenting the report in Delhi.

Since the report was finalised in October it did not take into account the second quarter results and hence the outlook has been revised, Kumar said.

This comes as a further downgrade from last year’s WESP 2019 report which had pegged India’s gross domestic product (GDP) growth at 7.6% in FY20 and 7.4% for the next fiscal.

According to the report, one in five countries will see its per capita income stagnate or decline this year, however, India will see its per capita income rise at above the 4% level in 2020.

The annual report has forecast global growth to improve to 2.5% from 2.3% last year if downside risks such as trade war and geopolitical tensions do not flare up.

For the South Asia region, the report estimates growth to pick up to 5.1% in 2020 after a decade-low 3.3% last year.

Although India is the main economy in the region with a 70% weightage in the UN’s calculations, Bangladesh looks to be pulling the average up since its economy is the fastest growing in the region at 8.1% this fiscal, as per the report.

In terms of policy recommendations for a slowing global economy, the report calls for an end to the reliance on monetary policy and advocated for more fiscal measures.

According to Kumar, the focus on monetary policy easing is enabling excess liquidity to flow into stock markets rather than productive sectors of economies. This creates an unhealthy situation in which stock markets are bullish while economies are slowing down.

“At this moment, the single biggest priority for the finance minister should be to revive growth. We must use all the available fiscal space to boost growth. Although fiscal consolidation is important, it can be a medium-term focus,” he said about India.
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