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 IMF retained India's growth projection at 9.5 per cent for 2021, after it downgraded the growth rate by three percentage points from 12.5 per cent in July, following the severe second wave of COVID-19 pandemic in the country.
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 in India that is being provided.
We have the growth numbers. With such a large population, you already have your 50% vaccinated that gives you confidence, but the risk of third wave remains.
The target was to get 40% of population of every country vaccinated by the end of this year. And a lot of countries haven't achieved that. That's a worry. The focus should be on that.
For India, the oil prices are going up, power outages, energy prices that's going up; address the pandemic, keep the confidence high (through more vaccinations). Also, it needs to pay attention to inflation.
