DNA Money Edit: IMF forecast puts to rest growth pangs

International Monetary Fund’s (IMF) prediction of India’s economic growth surging in 2019 comes close on the heels of a downward revision in the growth rate for the ongoing financial year. 

The fresh forecast for 2019 and 2020 has put to rest all concerns that the country’s $2.7 trillion economy is headed for a slowdown ahead of the 2019 general elections. After recording a 7.6% growth in the gross domestic product (GDP) in the first half (April-September) of 2018-19, the Central Statistics Office (CSO) had said the economy is likely to grow at a slower 6.8% the second half (October-March), clocking a sluggish 7.2% for the fiscal.

However, according to IMF, lower oil prices and a pick-up in investments will help India grow at 7.5% in 2019 and 7.7% in 2020. While India drives into the fast lane, China’s GDP growth has been on a downswing. China, which grew at 6.9% in 2017 as compared to 6.7% clocked by India, had a growth rate of 6.6% in 2018. In both 2019 and 2020, it is projected to grow at 6.2%. IMF said the growth in emerging and developing Asia would dip from 6.5% in 2018 to 6.3% in 2019 and 6.4% in 2020.

India’s growth will rev up if the global economy does not see any major headwinds such as trade wars and oil shocks. The modified Goods and Services Tax regime and other policy initiatives will surely help.