New Delhi: Global economic growth prospects in the medium term have weakened further as the recovery has been slow and uneven, finance minister Nirmala Sitharaman said on Monday.

“Since the pandemic, the global economy has been grappling with multiple crises, adversely affecting global growth. While the recovery is underway, it remains slow and uneven,” Sitharaman said at a seminar on sustainable growth.

“The current pace of global growth remains quite weak, well below the 3.8 per cent average in the two decades before the pandemic and looking ahead over the medium term, growth prospects have weakened further.”

Policy co-ordination, both global as well as domestic, is critical to ensure that growth comes back on track and remains strong, sustainable, balanced and inclusive, she said.

The G20 New Delhi Leaders’ Declaration (NDLD) underscores the urgency of implementing well-calibrated macroeconomic and structural policies to bolster equitable growth and enhance macroeconomic and financial stability, she said.

Fitch watch

Fitch Ratings has raised India’s medium-term potential growth estimate by 70 basis points to 6.2 per cent.

This came on the back of an improvement in the employment rate and a modest increase in the working-age population forecast.

Fitch projected medium-term potential growth for the 10 emerging economies at 4 per cent, down from 4.3 per cent from the previous estimate.

This was “driven by a 0.7 percentage point cut” in China’s growth estimate.

“We have lowered China’s supply-side GDP growth potential to 4.6 per cent from 5.3 per cent. China’s growth has slowed sharply in recent years and prospects for capital deepening have deteriorated as the property slump weighs heavily on the investment outlook,” the rating agency said in a report on Monday.

It also cut Russia’s potential growth, by 0.8 percentage points (pp) to 0.8 per cent. By contrast, it made upward revisions to Brazil, India, Mexico, Indonesia, Poland and Turkey relative to its previous estimates.

Fitch attributed the higher growth forecast of GDP for India to a swift recovery in labour force participation rates, following significant declines in 2020. “We have increased India’s estimate by 0.7pp while those of Brazil, Turkey and Indonesia are all now higher by 0.2pp,” it said.

In India’s case, “potential growth has increased by 0.7pp to 6.2 per cent given an improvement in the employment rate and a modest increase in the working-age population forecast”, it said, adding India’s labour productivity forecast is also higher.

It defined the medium term as a period from 2023 to 2027.