International Monetary Fund (IMF) on Monday predicted India’s GDP growth at 7.4 in the year 2018 and 7.8% in 2019, to regain its position as fastest-growing major economies as China emerges as no rival. In its Spring 2018 report, IMF predicts that with growth “picking up” after falling sharply in the second quarter of 2017 due to “one-off factors”, India in 2018 and 2019 would re-emerge as fastest-growing major economies.
Meanwhile, China is expected to grow respectively at 6.6% and 6.4% in the two years. IMF said that India has made progress on structural reforms in the recent past. Praising the implementation of the Goods and Services Tax (GST), IMF said that it will help India increase tax compliance, efficiency, and help reduce internal barriers. It is noteworthy that while IMF makes its projections on current year basis (January-December), India follows financial year (April-March).
“While the medium-term growth outlook for India is strong, an important challenge is to enhance inclusiveness,” the report said. India’s high public debt and recent failure to achieve the budget’s deficit target call for continued fiscal consolidation into the medium term to further strengthen fiscal policy credibility, the report said.
Among largest economies, IMF’s 2018 growth projections are 1.2% for Japan and 2.9% for the United States. US growth will be boosted in part by a largely temporary fiscal stimulus, which explains over one-third of our upgrade over last October for 2018 global growth, IMF said. The overall global growth is expected to tick up to 3.9% in both 2018 and 2019.