UN cuts India's growth rate by 0.6%, but at 7% it remains fastest growing economy in world

The UN has downgraded India’s growth rate for the current fiscal year by a cut of 0.6 percent from the projection made in January. However, despite the downward revisions India remains the fastest growing major economy in the world, ahead of China.

Representational Image/ (Photo by DENIS BALIBOUSE / POOL / AFP)

New Delhi: As the United Nations released the World Economic Situation and Prospects (WESP) 2019 Mid-year Update, India has been predicted to retain top spot in terms of growth rate with 7 percent in the year 2019. India’s economy has been predicted to grow at 7 percent in the fiscal year 2019 and at 7.1 percent in 2020. The UN has downgraded India’s growth rate for the current fiscal year by a cut of 0.6 percent from the projection made in January. However, despite the downward revisions India remains the fastest growing major economy in the world, ahead of China. On the back of strong domestic consumption and investment, the country’s economy is projected to grow at 7.1 per cent in fiscal year 2020, but the GDP growth is a downward revision from the 7.4 per cent estimated in January this year, according to a report by the United Nations. The WESP 2019 Mid-year Update, released here Tuesday, said that the Indian economy, which generates two-thirds of the regional output in South Asia, expanded by 7.2 per cent in 2018. "Strong domestic consumption and investment will continue to support growth, which is projected at 7.0 per cent in 2019 and 7.1 per cent in 2020," the report said. The estimates reflect a downward revision from the projections made in the WESP January report which had estimated that India would grow at 7.6 per cent in fiscal year 2019 and 7.4 per cent in 2020. Despite the downward revisions, India remains the fastest growing major economy in the world, ahead of China. Despite the projected slowdown, "I would also point out that the forecast for India is among the highest in all of the countries, particularly the large economies," Dawn Holland, the head of global economic monitoring, said on Tuesday during the release of the mid-year update to the World Economic Situation and Prospects report. "Compared to global growth of 2.7 per cent, obviously this stands out among the very high rates of growth in the world," she said. "We are still forecasting growth of 7 per cent in 2019 and 7.1 per cent in 2020." UN's forecasts were lower than those made by the International Monetary Fund (IMF) and the Asian Development Bank (ADB) last month. The IMF cut India's growth projections for this year by 0.2 per cent from the 7.5 per cent made in January to 7.3 per cent. It projected next year's growth at 7.5 per cent, though lower than the earlier 7.7 projection. The Asian Development Bank said India's growth rate would be 7.2 per cent this year and 7.3 per cent next year. Holland said that demonetisation does not continue to significantly impact the economy. "Demonetisation had a significant effect when it was initially introduced but seems to have passed through relatively quickly and we couldn't say there is a very large hangover from that in the current growth figures," she said. (with inputs from agencies)