IMF 2019 Growth Forecast: Report Says The Dragon’s Tale May Not Equal India’s 

The International Monetary Fund (IMF) has said that India is expected to retain its growth projections in 2018 but in 2019 there can be a marginal reduction in growth due to various national and International factors. However, China will see a reduction in its growth projection in 2019, Times of India has reported.

Rising oil prices and grim global financial conditions will impact Indian growth in 2019 but the reduction will be not enough for India to lose its fastest growing major economy tag.

“India’s growth is expected to increase to 7.3 per cent in 2018 and 7.4 per cent in 2019, (slightly lower than in the April 2018 World Economic Outlook (WEO) for 2019, given the recent increase in oil prices and the tightening of global financial conditions), up from 6.7 per cent in 2017,” the IMF said in its update to WEO.

“This acceleration reflects a rebound from transitory shocks (the currency exchange initiative and implementation of the national Goods and Services Tax), with strengthening investment and robust private consumption,” the agency said.

IMF has projected that China will grow by 6.6 per cent in 2018 but due to the impact of the trade tariffs being imposed on Chinese goods by United States, the growth will slow down to 6.2 per cent. India will benefit by this reduction in growth of China and will retain its fastest growing major economy tag for the next two years.

“Owing to these changes, our international growth projections for both this year and next are downgraded to 3.7 per cent, 0.2 percentage point below our last assessments and the same rate achieved in 2017. At the global level, recent data show weakening in trade, manufacturing, and investment. Overall, world economic growth is still solid compared with earlier in this decade, but it appears to have plateaued,” IMF said.

Medium term growth prospects of India, as per the report, will remain strong with a growth rate of 7.7 percent due to the ongoing structural reforms. It has been marked down by just under a half percentage point compared to WEO of April 2018.

Amid the increasing demand and rising prices of petrol and diesel in India, the WEO report has said that India’s inflation may rise to 4.7 per cent in 2018-19 compared to 4.5 per cent in 2016-17.