International Monetary Fund (IMF) has predicted (April 17) that India would be the fastest growing major economy in the world again in 2018. According to the IMF, GDP growth of India is estimated to be 7.4 percent in 2018 and 7.8% in 2019. Since the Chinese economy is cooling and estimated by the Chinese government to have a growth rate between 6.5 to 7.0 percent in the next few years (a new normal), India is poised to regain its position as fastest-growing major economies. 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.IMF has predicted that China would grow respectively at 6.6% and 6.4% in the two years.
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. The overall global growth is expected to tick up to 3.9% in both 2018 and 2019.
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).However, the IMF report has pointed out that realization of inclusiveness would still be a big challenge in the medium-term despite higher growth. Further the report cautioned that 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.