IMF projects India to grow at 7.4%

The International Monetary Fund (IMF) said on Wednesday that India would emerge the fastest growing major economy in 2018, projecting a growth rate of 7.4 per cent, rising to 7.8 per cent in 2019. According to IMF's Asia and Pacific Regional Economic Outlook report, India was recovering from the effects of demonetisation and the introduction of the Goods and Services Tax.  

"The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption," the report said, adding, 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 banda of four per cent with a plus or minus two per cent change, the report said.  
Adding a note of caution, the report said, "In India, given increased inflation pressure, monetary policy should maintain a tightening bias." The consumer price increase in 2017 was 3.6 per cent and is projected to be five per cent in 2018 and 2019. "The current account deficit in fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows," the report said.
Asia continues to be both the fastest-growing region in the world and the main engine of the world's economy, it said. The region contributes over 60 per cent of global growth and three-quarters of this comes from India and China, which is expected to grow 6.6 per cent in 2018 and 6.4 per cent in 2019, it said.  
After India, Bangladesh is projected to be the fastest-growing economy in South Asia with growth rates of seven per cent for 2018 and 2019, while Sri Lanka is projected to grow at four per cent in 2018 and 4.5 in 2019, and Nepal five per cent in 2018 and four per cent in next. (Pakistan, which is grouped with the Middle East, is not covered in the Asia report.)  
The report said that US President Donald Trump's fiscal stimulus is expected to support Asia's exports and investment. The Asian region's growth rate was expected to be 5.6 per cent for 2018 and 2019.