Gopinath said US-China trade tensions would cumulatively reduce the level of global GDP by 0.8% by 2020.
The International Monetary Fund (IMF) has cut India's GDP growth forecast to 6.1 per cent for the current fiscal from its earlier projection of 7 per cent. IMF has also reduced growth forecast for FY21 by 20 bps to 7.2%.
Egypt said its economy grew by 5.6% in the 2018/19 year, slightly above the IMF's estimate of 5.5%, unchanged from April.
This trend has been exacerbated by slower demand in some emerging markets like Turkey, and above all in China, where the end of tax breaks for auto buyers has hurt demand.
The powerhouse economy of the EU, Germany, is likely to see growth drop by 1%from 1.5% last year to just 0.5% this year.
The report said that the expected rebound would represent a modest bounceback after steep economic declines this year. The latest Economic outlook revealed that India is going to have a 6.1% growth rate in this financial year.
"The strengthening of growth in 2020 and beyond in India as well as for these two groups (which in some cases entails continued contraction, but at a less severe pace) is the driving factor behind the forecast of an eventual global pickup, the report said". This has kept labor markets buoyant and wage growth and consumption spending healthy in advanced economies.
The IMF also predicts Australia's economy will grow 2.3 per cent in 2020 - down from a predicted 2.7 per cent in the April forecasts.
The chief economist said that as far as policy priorities go "undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list". "The downward revision relative to the April 2019 WEO of 1.2 percentage points for 2019 and 0.5 percentage point for 2020 reflects a weaker-than-expected outlook for domestic demand", the International Monetary Fund said in its World Economic Outlook (WEO). Obviously, global trade disputes and Brexit factor in this decline, but a substantial part of it has been blamed on a downturn in German vehicle production.
The budget deficit that had climbed to 8.8 percent of GDP in the last FY 2019, would now stand at 7.4 percent of GDP in the ongoing fiscal year 2020. Even a boost from a recent two-year federal budget deal and Federal Reserve's rate decrease would not hamper the USA economic growth much considering the current situation.
She attributed the weakness in growth to a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investments and demand for capital goods.
Fortunately, in contrast to extremely weak manufacturing and trade, the services sector continues to hold up nearly across the globe. She suggested that would boost confidence and rejuvenate investment. With interest rates around the world at historically low levels-in some cases at zero or even below-the ability of central banks to supply economic stimulus is very limited.
Monetary policy has played a significant role in supporting growth.
"The government has taken welcome steps with tax audits, e-filling, closing loopholes, combating corruption in tax offices, increased exercised taxes and it also launched its strategic growth initiatives that call for this high-level committee".