There are growing signs of a synchronized global economic recovery. The Organisation for Economic Cooperation and Development said in September that economic momentum is picking up in most major economies—the US, Europe, Japan and China. The Asian Development Bank also revised its growth projections for most major economies in Asia. The World Trade Organization has been saying for some time that global trade is getting back on track.

India has been an exception because of the twin shocks from demonetisation and the goods and services tax (GST). However, there are signs that domestic demand has begun to recover since August. Indian policymakers also need to take advantage of the growing strength of the world economy. The recent rupee weakness—a mirror image of the bounce in the dollar—should help.

The immediate challenge is to figure out the extent to which GST transition has hurt exporters. The increase in the current account deficit despite a slowing economy remains a puzzle.

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