India’s government must take steps quickly to reverse the economic slowdown of an economy that has been one of the engines of global growth, the International Monetary Fund (IMF) said.
Declining consumption and investment, and falling tax revenue, have combined with other factors to put the brakes on one of the world’s fastest growing large economies, the IMF said in its annual review of India’s economy.
More:
After lifting millions out of poverty “India is now in the midst of a significant economic slowdown,” Ranil Salgado, of the IMF Asia and Pacific Department, told reporters on Monday.
“Addressing the current downturn and returning India to a high growth path requires urgent policy actions,” Salgado added.
However, the government has limited space to boost spending to support growth, especially given high debt levels and interest payments, the IMF warned.
The IMF said India should avoid using public funds to stimulate growth – so-called fiscal measures – but instead focus on cutting debt to free up financial resources that can be used for investment.
“Economic development projects and enhanced social initiatives in India will be vital in the coming years,” the IMF said in its statement. “But to generate the revenue needed to get them off the ground, India’s debt – among the highest in emerging markets – must be reduced.”
IMF chief economist Gita Gopinath last week said India’s slowdown had “surprised to the downside,” and said the fund is set to significantly downgrade its growth estimates for the Indian economy in the World Economic Outlook which will be released next month.
The IMF in October slashed its India forecast for 2019 by nearly a full percentage point to 6.1 percent, while cutting the outlook for 2020 to 7.0 percent.
Salgado said India’s central bank has “room to cut the policy rate further, especially if the economic slowdown continues.”
The Reserve Bank of India (RBI) cut the key lending rate five times this year to a nine-year low, but at its last meeting earlier this month defied expectations by keeping policy unchanged.
The central bank slashed its annual growth forecast for India to 5 percent from 6.1 percent, as consumer demand and manufacturing activity contract.
India’s economy grew at its slowest pace in more than six years in the July-September period, falling to 4.5 percent from 7 percent a year ago, according to government data.
Salgado said “the government needs to reinvigorate the reform agenda,” including restoring the health of the financial sector in order to “enhance its ability to provide credit to the economy.”
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
