India To Regain Status Of Fastest Growing Economy By 2019, With 7.4 % Growth Forecast: IMF

| January 23 , 2018 , 10:14 IST

Demonetisation and GST slowed down the Indian economy resulting in India's growth rate falling behind that of China, however, the International Monetary Fund (IMF) has predicted that by 2019 India will once again become the fastest growing major economy of the world.

In the IMF January update of the 'World Economic Outlook: Brighter Prospects, Optimistic Markets, Challenges Ahead' released in Davos and Washington, IMF has forecast a 7.4 percent growth of India in FY19, as compared to the 6.7 percent growth this year. In FY20 the growth of India is expected to rise further to 7.8 percent.

"Some 120 economies, accounting for three-quarters of world GDP, have seen a pickup in growth in year-on-year terms in 2017, the broadest synchronised global growth upsurge since 2010," the IMF said.

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Although this year, the growth of China, pegged at 6.8 percent is higher than the 6.7 percent forecast for India, next year in FY19 the growth of China is expected to fall to 6.6 percent, considerably lower than India's 7.4 percent forecast for FY19.

India slipping behind China in terms of growth this year has been attributed to the disruption caused by demonetisation and the implementation of Goods and Services Tax (GST).

However, industrial production growth in India touched a 25-month high in November, consumer goods leader Hindustan Unilever reported an 11 percent volume growth in December, exports have rapidly grown in the past two months and stock markets have been surging.

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The US economy is expected to grow 2.7 percent in 2018 and 2.5 percent in 2019, higher by 0.4 and 0.6 points respectively than the earlier estimates.

As per the IMF, the overall global economy is also expected to grow 3.9 percent this year, an increase by 0.2 percentage points.

"Global growth forecasts for 2018 and 2019 have been revised upward by 0.2 percentage point to 3.9%," the IMF said.

IMF director of research Maurice Obstfeld added, "as the year 2018 begins, the world economy is gathering speed. This is good news. But political leaders and policymakers must stay mindful that the present economic momentum reflects a confluence of factors that is unlikely to last for long."