The International Monetary Fund or IMF has retained its economic growth forecast for India. The multilateral body in its July world economic outlook update projects India's GDP to grow at 7.2 per cent in 2017-18 and accelerate further to 7.7 per cent in 2018-19. This is the same growth rate the IMF had predicted in its April update. "Growth in India is forecast to pick up further in 2017 and 2018, in line with the April 2017 forecast," the IMF said.
In the case of China, the IMF has raised its forecast marginally to 6.7 per cent in 2017 and 6.4 per cent in 2018 from earlier projections.
This means that India is projected to grow faster than China in 2017 as well as 2018.
Demonetisation had dragged India's economic growth to 6.1 per cent in the January-March quarter. India's GDP growth in 2016-17 came in at 7.1 per cent, in line with the official estimate. Many other agencies also predict an acceleration in India's GDP growth this year. Recently, the Asian Development Bank maintained its growth forecast for India at 7.4 per cent for fiscal year 2017-18 and 7.6 per cent for 2018-19.
In its latest update on the Indian economy, the IMF said: "While activity slowed following the currency exchange initiative, growth for 2016 - at 7.1 per cent - was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year."
The IMF also noted that inflation has also been declining in several emerging economies, such as Brazil, India, and Russia.
Global outlook
The IMF has stuck to its earlier forecast of global growth picking up to 3.5 per cent in 2017 and 3.6 per cent in 2018. This is higher than the 3.2 per cent seen in 2016.
The IMF however said that the global growth projections "mask somewhat different contributions at the country level. US growth projections are lower than in April, primarily reflecting the assumption that fiscal policy will be less expansionary going forward than previously anticipated. "
On the other hand, the IMF said, "growth has been revised up for Japan and especially the euro area, where positive surprises to activity in late 2016 and early 2017 point to solid momentum".
China's growth projections have also been revised up, reflecting a strong first quarter of 2017 and expectations of continued fiscal support, the IMF added.
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