Gita Gopinath
Gita Gopinath

New Delhi: Gita Gopinath, Chief Economist of International Monetary Fund (IMF) on Monday said that India needs a lot of investment and it is important to encourage it on January 20, in reference to Jeff Bezos’s visit last week.

Jeff Bezos, during a three-day visit to India that featured no meeting with any minister or government official, promised to invest $1 billion in India. Union Commerce Minister Piyush Goyal scoffed at the announcement, saying Mr Bezos had done "no great favours" with the investment.

"They may have put in a billion dollars. But then if they make a loss of a billion dollars every year, then they jolly well have to finance that billion dollars. So it's not as if they are doing a great favor to India when they invest a billion dollars," the minister had said while Bezos was still in India.

To a question on whether Goyal's remarks on Jeff Bezos had hurt market sentiment, Gopinath told NDTV: ''India needs a lot of investment. It's important to encourage investment more broadly with the mandate of the country. We need to revive domestic investment in India, consumption spending is weak.”

“So I think the environment has to be created for greater investment because that's what will raise the capital stock and raise India's potential growth,” she added.

Meanwhile, equity benchmark indices traded lower on Tuesday amid a slew of weak corporate earnings while the International Monetary Fund (IMF) cut its growth forecast for global and Indian economies.

IMF's Gita Gopinath on Tuesday said the wealth inequality in the US was one of the highest among advanced economies and the country's tax system needs to be more progressive.

As President Donald Trump and his administration touted the bounce back of the US economy, Gopinath also said America should do more to shore up its fiscal toolbox in the event of a more dramatic global slowdown.

‘Slowdown to hit insurance premium collections’

Mumbai: Despite low penetration, the ongoing economic slowdown will impact insurance premium collections over the next two to three years, global ratings agency Moody's Investors Service said.The total insurance premium collected slowed down marginally for the year-ended March 2019, while the dip in growth was much sharper for general insurance.The IMF has pegged the number at 4.8% and expects it to pull down global growth as well. "We expect India's more moderate economic expansion to result in slower (re)insurance premium growth over the next 2-3 years," the rating agency said in its report.Total insurance premium grew 11.3% in 2018-19 as against 11.5% in the year-ago period due to a slowdown in economic growth.

‘Global growth pessimism at record high’

Davos: Chief executive officers are showing record levels of pessimism in the global economy with 53% predicting a decline in the rate of economic growth in 2020.

This is up from 29% in 2019 and just 5% in 2018 --highest level of pessimism since 2012. While, the number of CEOs projecting a rise in the rate of economic growth dropped from 42% in 2019 to only 22% in 2020.

CEO pessimism over global economic growth is particularly significant in North America, Western Europe and the Middle East with 63%, 59% and 57% of CEOs from those regions predicting lower global growth in the year ahead.

In India, 52% of them believe the global growth will decline while 17% of them say it will stay the same and 27% hope it will improve.

"Given the lingering uncertainty over trade tensions, geopolitical issues and the lack of agreement on how to deal with climate change, the drop in confidence in economic growth is not surprising -- even if the scale of the change in mood is," said Bob Moritz, Chairman of the PwC Network.

"These challenges facing the global economy are not new. However, the scale of them and the speed at which some of them are escalating is new, the key issue for leaders gathering in Davos is: how are we going to come together to tackle them?"

On a brighter note, said Moritz, while there is record pessimism among business leaders, there are still real opportunities out there.

"With an agile strategy, a sharp focus on the changing expectations of stakeholders, and the experience many have built up over the last ten years in a challenging environment, business leaders can weather an economic downturn and continue to thrive," he said.

CEOs are also not so positive about their own companies' prospects for the year ahead, with only 27% of CEOs saying they are 'very confident' in their own organisation's growth over the next 12 months -- the lowest level we have seen since 2009 and down from 35% last year.

While confidence levels are generally down across the world, there is a wide variation from country to country with China and India showing the highest levels of confidence among major economies at 45% and 40% respectively, the United States at 36%, Canada at 27%, Britain at 26%, Germany at 20%, France 18% and Japan having the least optimistic CEOs with only 11% of CEOs very confident of growing revenues in 2020.

(To download our E-paper please click here. The publishers permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Free Press Journal