New York: The International Monetary on Wednesday said that Indian economywould be the fastest growing major economy in 2018. The IMF said that with a growth rate of 7.4 per cent that rises to 7.8 per cent in 2019, the prospects for Indian economy are bright.
In its Asia and Pacific Regional Economic Outlook report, IMF said that India was recovering from the impact of demonetization and GST roll out and “the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.”
The IMF also said that 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.
However, cautioning the country, it said, “In India, given increased inflation pressure, monetary policy should maintain a tightening bias.” Besides India, the report said that Bangladesh would be second largest economy emerging in South Asia.
Asia has more buffers than in the past and has room to raise rates, but despite a strong growth outlook the region remains vulnerable to a sudden tightening in global financial conditions, the IMF’s Asia Pacific director said. Changyong Rhee, the director of the IMF’s Asia and Pacific Department, also said he wasn’t very concerned about a market sell-off in Indonesia and the Philippines at the moment.
Earlier, ADB Chief Economist Yasuyuki Sawada said, “India’s projected GDP growth of over 7% for the current fiscal is “amazingly fast” and if this momentum is maintained the size of the economy can double within a decade”.
The country shouldn’t worry about not achieving 8% growth but focus on increasing domestic demand by reducing the income inequality, he said.