The International Monetary Fund (IMF) released the World Economic Outlook report on Tuesday, predicting India’s GDP growth rate to be 7.3% in 2018 (current financial year) and 7.4% in 2019 (next financial year).According to the report, global growth will remain steady over 2018–19 at 3.7% (last year’s rate), but its pace is less vigorous than projected in April and has become less balanced. IMF’s analysis and projections of global economic developments are presented in the World Economic Outlook (WEO). It further classifies the analysis geographically and by stage of economic development.
Key Findings Of The IMF’s World Economic Outlook
- If the predictions hold, India will become the fastest growing economy of the world, leaving China behind with over 0.7 percentage point in 2018 and 1.2 percentage point in the coming year. China was the fastest growing economy in 2017 as it was ahead of India by 0.2 percentage points.
- Emerging Asia continued to register strong growth, supported by a domestic demand-led pickup in the Indian economy from a four-year-low pace of expansion in 2017.
- Gross Domestic Product or GDP growth rate accelerated to 8.2% in the first quarter of this year.
- Medium-term growth prospects remain strong at 7.75% but will gradually slow down to 5.6% as India continues to transit to a better sustainable growth path with financial de-risking and environmental controls.
- The country has recovered from demonetisation and the introduction of Goods and Service Tax (GST) system. The Global Economic Outlook report stated that these reforms have improved the business climate.
- Inflation is expected to pick up in the economy due to a narrowing output gap, effects of exchange rate, depreciation and the accelerating fuel prices. The monetary policy should be tightened.
- In India, a high interest burden and risks from rising yields emphasis on debt reduction to establish policy credibility and build buffers, the report stated.
- The GDP growth rate of United States for 2018 is 2.9% and is expected to be 2.5% in 2019.
- United States’ monetary policy and a stronger dollar have pressurised the exchange rates in emerging economies like Brazil, India and South Africa, among others. Government should intervene in the foreign exchange market to address unbalanced market conditions.
- India had recorded a 6.7% GDP growth rate in 2017. The figure stood at 7.2% for the third quarter (Q3) of the last financial year.