The International Monetary Fund, or IMF, on Tuesday, predicted a growth rate of 7.3% for India in the current year. However, the growth for 2019 has been lowered to 7.4% from its annual World Economic Outlook released in April and called for further tightening of monetary policy.
In 2017, India had recorded a 6.7 per cent growth rate. “India’s growth is expected to increase to 7.3% in 2018 and to 7.4% in 2019 (slightly lower than in the April 2018 World Economic Outlook (WEO) for 2019, given the recent increase in oil prices and the tightening of global financial conditions), up from 6.7% in 2017,” the IMF said in its quarterly World Economic Outlook report.
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It reflects a rebound from transitory shocks (demonetisation and implementation of the national Goods and Services Tax), with strengthening investment and robust private consumption.
India’s medium-term growth prospects remain strong at 7.75%, benefiting from ongoing structural reform, but have been marked down by under 0.5% point relative to the April 2018 WEO, it said.
If the projections are true, then India will regain the tag of the fastest growing major economies of the world, crossing China with more than 0.7 percentage point in 2018 and an impressive 1.2 percentage point growth lead in 2019.
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The growth in China is projected to moderate from 6.9% in 2017 to 6.6% in 2018 and 6.2 per cent in 2019, reflecting a slowing external demand growth and necessary financial regulatory tightening, the report said. China was the fastest growing economy in 2017 as it was ahead of India by 0.2 percentage points.
Over the medium term, growth is expected to gradually slow to 5.6% as the economy continues to make the transition to a more sustainable growth path with continued financial de-risking and environmental controls, it noted.
The global growth forecast has been lowered by two-tenths to 3.7% for 2018 and 2019 due to upswing in economic risks due to rising trade tensions and debt levels