Economy to grow 7.2% in FY 18; reforms need to be fasttracked: IMF
The International Monetary Fund (IMF) on Tuesday called for accelerated economic reforms for India to achieve a higher growth trajectory, while retaining its growth projection of 7.2% for 2017-18.
In its biannual World Economic Outlook (WEO), it increased India’s growth estimate for 2016-17 to 6.8%, from 6.6% estimated in January, while maintaining that economic activity had slowed primarily because of the temporary negative consumption shock induced by cash shortages and payment disruptions from the currency exchange initiative.
India’s statistics department has estimated economic growth in 2016-17 at 7.2%.
The Narendra Modi government announced withdrawal of high-value currency notes on 8 November; the full economic impact of this is yet to be thoroughly ascertained.
The Asian Development Bank (ADB) earlier this month said India’s economy is set to grow at 7.4% in financial year 2017-18 against 7.1% the previous year, on the back of a pick-up in consumption demand and higher public investment.
IMF’s projection makes India the fastest growing major economy in 2016-17, with China estimated to have grown at 6.7% during 2016. China’s economy is expected to steadily slow down to 6.6% in 2017 and 6.2% in 2018 due to the “complex process of rebalancing” by reorienting demand from exports and investment in consumption.
The report said India’s medium-term growth prospects are favourable, with growth expected to rise to about 8% over the medium term due to implementation of key reforms, loosening of supply-side bottlenecks, and appropriate fiscal and monetary policies.
Global growth has been raised marginally to 3.5% in 2017 from the January estimate of 3.4% due to a “long-awaited cyclical recovery in investment, manufacturing and trade” that may take it to 3.8% by 2022, driven by an “acceleration of activity in India resulting from the implementation of important structural reforms, and a successful rebalancing of China’s economy to lower, but still high, trend growth rates.”