Growth slowdown in India temporary: IMF chief Kristalina Georgieva

Davos: IMF chief Kristalina Georgieva on Friday said growth slowdown in India appears to be temporary and that she expects the momentum to improve going ahead.

The world appears a better place in January 2020 compared to what it was when IMF announced its World Economic Outlook in October 2019, she said at the World Economic Forum (WEF) 2020 here.

She said the factors driving this positive momentum include receding trade tension after the US-China first phase trade deal and synchronised tax cuts, among others. She, however, said 3.3 per cent is not a fantastic growth rate for the world economy. "It is still sluggish growth. We want fiscal policies to be more aggressive and we want structural reforms and more dynamism," the Managing Director of the International Monetary Fund (IMF) said.

On Monday, the fund lowered growth estimate for the world economy to 2.9 per cent for 2019, citing "negative surprises" in few emerging market economies, especially India. The IMF also revised downwards its forecast for India to 4.8 per cent for 2019-20.

Regarding emerging markets, Georgieva on Friday said they are also moving forward. "We had a downgrade in one large market India, but we believe that's temporary. We expect momentum to improve further going ahead. There are also some bright spots like Indonesia and Vietnam," she noted.

According to Georgieva, a number of African countries are doing very well, but some other nations like Mexico are not. On risks ahead for the global economy, the IMF chief listed factors like weakness in long-term productivity growth and low inflation. "We are living in a more risk-prone world. It is only January and there have been events that are sparking risks for the global economy," she added.

Releasing an update to its World Economic Outlook (WEO) on Monday, the IMF had said global growth, estimated at 2.9 per cent in 2019, is projected to increase to 3.3 per cent in 2020 and inch up further to 3.4 per cent in 2021.

WEF forms consortium on digital currency

The World Economic Forum on Friday announced the first global consortium focused on designing a framework for the governance of digital currencies, including stablecoins.

The Global Consortium for Digital Currency Governance will aim to increase access to the financial system through innovative policy solutions that are inclusive and interoperable. The opportunities for financial inclusion will only be unlocked if the space is regulated properly and includes public-private cooperation across developed and high growth markets, the WEF said while announcing the new initiative on the last day of its 50th annual meeting after extensive consultation with the global community.

Digital currencies are often cited as a tool for financial inclusion, but this opportunity can only be realized when paired with good governance. This is the first initiative to bring together leading companies, financial institutions, government representatives, technical experts, NGOs and members of the Forum's communities on a global level, it said.