India is projected to grow at 7.4 per cent in 2018 as against China's 6.8 per cent, the IMF said on Monday, making it the fastest growing country among emerging economies. The acceleration in India's growth rate ahead comes after the slowdown last year due to demonetisation and the implementation of GST. In its latest World Economic Outlook (WEO) update released on Monday in Davos, Switzerland on the sidelines of the World Economic Forum, the International Monetary Fund has projected a 7.8 per cent growth rate for India in 2019.
Growth rate projections for both 2018 and 2019 remain unchanged since its October 2017 WEO projections. China, during the same period is expected to grow at 6.6 per cent and 6.4 per cent respectively, the IMF said. However, the IMF revised upwards to 3-9 per cent its forecast for world economic growth in 2018 and 2019 saying that sweeping U.S. tax cuts were expected to boost investment in the world's largest economy and help its main trading partners. Th is is a 0.2 percentage point increase from its last update in October.
The IMF said, the aggregate growth forecast for the emerging markets and developing economies for 2018 and 2019 is unchanged, with marked differences in the outlook across regions. It projected India to grow at 7.4 per cent in 2018 as against China's 6.8 per cent. Emerging and developing Asia will grow at around 6.5 per cent over 2018-19, broadly the same pace as in 2017, it said, adding that the region continues to account for over half of world growth.
Growth is expected to moderate gradually in China (though with a slight upward revision to the forecast for 2018 and 2019 relative to the fall forecasts, reflecting stronger external demand), pick up in India, and remain broadly stable in the ASEAN-5 region, the IMF said. In the year gone by, China (6.8 per cent) was ahead of India (6.7 per cent), giving China the tag of being the fastest growing emerging economies, as has been the case for most years of the past several decades.
Notably, with a growth rate of 7.1 per cent, India was the fastest growing country among emerging economies in the year 2016. But due to the demonetisation in late 2016 and implementation of the Goods and Services Tax (GST), India's economy slowed to 6.7 per cent in 2016. In 2017, India's growth rate dropped to 6.7 per cent.