New Delhi: The International Monetary Fund (IMF) kept its outlook for India GDP growth rate unchanged at 7.2% in 2017-18 and 7.7% in 2018-19, according to the latest update of the fund’s World Economic Outlook released Monday.
The IMF also kept its outlook for World GDP growth unchanged at 3.5% in 2017 and 3.6% in 2018. The global economy grew at 3.2% in 2016. The Indian economy expanded by 7.1% in 2016-17.
The fund revised upwards its growth forecast for China and Japan, although India remains the fastest growing major economy in the region and the world. For India, “while activity slowed following the currency exchange initiative, growth for 2016––at 7.1 percent––was higher than anticipated due to strong government spending and data revisions that show stronger momentum in the first part of the year," IMF said in the World Economic Outlook report.
The report seems to suggest good times ahead for the global economy, with risks to growth in the medium term remaining low. Still, IMF pointed out that the projected global growth for this year “remains lower than pre-crisis averages" referring to the boom ahead of the global financial crisis of 2008.
IMF pointed out some of the trends that economies need to keep an eye on—monetary policy normalization in some advanced economies, notably the US being one of them. It could trigger a faster-than-anticipated tightening in global financial conditions, IMF said.
A turn toward inward-looking policies and geopolitical risks remain salient, IMF said, while particularly cautioning against protectionist tendencies. The agency urged the international community to adapt the multilateral system to the changing global economy.
“Together with strong domestic policies, it will also help avoid a broad withdrawal from multilateralism, either through widespread protectionism or a competitive race to the bottom in financial and regulatory oversight, which would leave all countries worse off," said the outlook.