IMF Sees India GDP Growth At 7.4% In 2018, China’s At 6.8%

India is projected to grow at 7.4 percent in 2018 as against China's 6.8 percent, the IMF said today, making it the fastest growing country among emerging economies following last year's slowdown due to demonetisation and the implementation of the Goods and Services Tax.

In its latest World Economic Outlook update released today in Davos, Switzerland on the sidelines of the World Economic Forum, the International Monetary Fund has projected a 7.8 percent growth rate for India in 2019. Growth rate projections for both 2018 and 2019 remains unchanged since its October 2017 WEO projections.

China, during the same period is expected to grow at 6.6 percent and 6.4 percent respectively, the IMF said.

Also Read: IMF Says Global Growth Picking Up as U.S. Tax Cuts Take Hold

Emerging and developing Asia will grow at around 6.5 percent over 2018–19, “broadly the same pace as in 2017”, it said, adding that the region continues to account for over half of world growth.

In the year gone by, China (6.8 percent) was ahead of India (6.7 percent), giving China the tag of being the fastest growing emerging economies, as has been the case for major parts of the past several decades.

Notably, with a growth rate of 7. 1 percent, India was the fastest growing country among emerging economies in the year 2016.

But due to the demonetisation in late 2016 and implementation of GST, India's economy slowed down a little bit to 6.7 percent in 2016. In 2017, India's growth rate dropped to 6.7 percent.

According to Maurice Obstfeld, IMF Economic Counsellor and Director of Research, the two biggest national economies driving current and near-term future growth are predictably headed for slower growth.

Also Read: India Ranks 62, Behind China And Pakistan, On Inclusive Development Index

China will both cut back the fiscal stimulus of the last couple of years and, in line with the stated intentions of its authorities, rein in credit growth to strengthen its overextended financial system.

Consistent with these plans, the country's ongoing and necessary rebalancing process implies lower future growth, he said at a news conference in Davos.

"As for the United States, whatever output impact its tax cut will have on an economy so close to full employment will be paid back partially later in the form of lower growth, as temporary spending incentives (notably for investment) expire and as increasing federal debt takes a toll over time," he said.

Early this month, a top IMF official said that India is reclaiming its place as a growth leader.

"China alone is providing one-third of global growth. Japan has been growing above potential for several quarters," said the IMF First Deputy Managing Director David Lipton at the Asian Financial Forum in Hong Kong on January 15.

"India is reclaiming its place as a growth leader after a short slowdown. And the ASEAN-5 have gained momentum in response to higher investment and increased exports," Lipton had said.