The International Monetary Fund (IMF) on Tuesday slashed India's economic growth projection for 2019 to 6.1 per cent, but said that it might pick up to 7 per cent in 2020.
In July this year, the IMF had put India's growth rate to 7 per cent for the current fiscal owing to "weaker-than-expected outlook" for the domestic demand. In April, it had said that India will grow at 7.3 per cent in 2019.
"In India, growth softened in 2019 as corporate and environmental regulatory uncertainty, together with concerns about the health of the nonbank financial sector, weighed on-demand," said the IMF in its latest report.
In comparison, China, whose economy grew at 6.6 per cent in the year 2018, is expected to grow at 6.1 per cent rate in 2019 and 5.8 per cent in 2020.
"If all 2018 and 2019 tariffs between US and China were lifted, global GDP would be boosted by 0.8 per cent," IMF chief economist Gita Gopinath said addressing a press conference in Washington D.C.
"The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods," the IMF said.
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It said that to rejuvenate growth, policymakers must undo the trade barriers put in place with durable agreements, rein in geopolitical tensions and reduce domestic policy uncertainty.
The monetary body also estimated that the US-China trade tension will cumulatively reduce the level of global GDP by 0.8 per cent by 2020.
"The global economy is in a synchronised slow down and we are, once again, downgrading growth for 2019 to 3 per cent, its slowest pace since the global financial crisis. Growth continues to be weakened by rising trade barriers and increasing geopolitical tensions," it said.