The International Monetary Fund has confirmed that India will be the fastest-growing major economy by 2018, with a growth of 7.4 this year that rises to 7.8 in 2019 with medium-term prospects remaining positive. The IMF’s Asia and Pacific Regional Report said that India was recovering from the effects of demonetization and the introduction of the Goods and Services Tax.
— IMF (@IMFNews) May 9, 2018
IMF went on to say, “the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.” Medium-term consumer price index inflation “is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band of four percent with a plus or minus two percent change, the report said.
Medium-term consumer price index inflation “is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band of four percent with a plus or minus two percent change, the report said. It said the consumer price increase in 2017 was 3.6 percent and projected it to be five percent in 2018 and 2019.
“The current account deficit in the fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows,” the report said. However, it added a note of caution: “In India, given increased inflation pressure, monetary policy should maintain a tightening bias.”
IMF in its report said that Bangladesh is the fastest growing economy in South Asia after India with a projected growth rate of 7 in 2018 and 2019; Sri Lanka is projected to grow at four percent in 2018 and 4.5 in 2019, and Nepal five percent in 2018 and four percent in 2019. Overall, the report said that Asia continues to be both the fastest-growing region in the world and the main engine of the world’s economy.
Asia is expected to grow by 5.6% in both 2018 and 2019, 0.1 of a percentage point higher than expected in October. Take a look at the growth rates for each country. #IMFAsia https://t.co/gq2hEOXIsP pic.twitter.com/TuKyFVQ8Xb
— IMF (@IMFNews) May 9, 2018
The report said that US President Donald Trump’s fiscal stimulus is expected to support Asia’s exports and investment. However, in the medium term the report said that “downside risks dominate” for the region and these include a tightening of global financial conditions, a shift toward protectionist policies, and an increase in geopolitical tensions.
“While mobile payments are expanding sharply in such economies as Bangladesh, India, and the Philippines, on average Asia is lagging sub-Saharan Africa,” the IMF said, adding that the region should take steps to ensure it is able to reap the full benefits of increasing digitization in the global economy.
This is not the first time an International forum has lauded India and the growth trajectory under Prime Minister Modi’s leadership. Recently, Moody’s had backed Modi and upgraded India’s sovereign rating for the first time in 14 years. The World Bank had also projected a solid growth trajectory under Modi’s reign. India has also jumped 30 places in Ease of Doing Business ranking and the opposition was surprisingly not happy about it. Recently, Michael Dell had spoken of how he was inspired by India and Bill Gates had lauded Modi’s Aadhaar scheme and said that he has funded the World Bank to take the Aadhaar approach to other countries.
With IMF too chiming in again, the fear-mongering about the Economy’s downward trajectory seems to have been comprehensively dismissed.