The International Monetary Fund(IMF) has retained India's GDP growth forecast for fiscal year 2018-19 at 7.3 percent, saying that the growth would continue on strengthening investment and robust domestic consumption.
In 2017, India had recorded a 6.7 percent growth rate.
However, it has cut growth forecast for the fiscal year 2019-2020 to 7.4 percent from the earlier 7.5 percent on the back of higher crude prices and mixed global economic cues.
The Reserve Bank of India (RBI) in its fourth bi-monthly monetary policy meeting retained its FY19 growth forecast at 7.4 percent.
IMF said that India’s medium-term growth prospects remained strong at 7.75 percent, helped by the on-going structural reforms. India may cross China as the fastest growing economy, if the projections stay true, the report said, adding that China is expected to grow 6.6 percent in 2018 and 6.2 percent in 2019.
IMF recognised important reforms put in place which includes, the inflation targeting monetary policy framework, the insolvency and bankruptcy code (IBC), the goods and services tax (GST), and steps to liberalise foreign direct investment (FDI) flows and the ease of doing business.
On India's Inflation:
Inflation in India is on the rise, estimated at 3.6 percent in fiscal year 2017-18
and projected at 4.7 percent in fiscal year 2018-19, compared with 4.5 percent in fiscal year 2016-17, amid accelerating demand and rising fuel prices, IMF said.
On Global Growth:
The world body has cut global growth forecast for 2018 to 3.7 percent from the previous 3.9 percent as the trade tension between the largest global economy- US and other countries have started to hit the global economic activity.
On US And China:
The 2018 growth forecast for US and China, the two biggest economies engaged in a global trade war, have been retained by the IMF at 2.9 percent and 6.6 percent, respectively. However, for the next fiscal year, the global body has downgraded the growth forecast of US and China to 2.5 percent and 6.2 percent, respectively.
On Emerging Economies:
Emerging economies, which were under massive pressure in the last few months saw more revisions to their growth forecasts by the IMF. Among the worst hit were Argentina and Turkey, whose currency hit an all-time low against the US dollar. It has downgraded the forecast to 4.7 percent for both 2018 and 2019.
First Published: IST