The International Monetary Fund (IMF) remains bullish on India’s growth potential and has retained its GDP forecast for the country at 6.7 per cent in 2017 and 7.4 per cent in 2018.

In its World Economic Outlook Update, it also estimated that the Indian economy would grow by 7.8 per cent in 2019, which make the country the world’s fastest-growing economy in 2018 and 2019, the top ranking it briefly lost in 2017 to China.

“The aggregate growth forecast for the emerging markets and developing economies for 2018 and 2019 is unchanged… Growth is expected to…pick up in India…,” said the report, which was released ahead of the World Economic Forum meeting in Davos.

The projection is in line with official estimates from the Central Statistics Office, which pegged GDP growth at 6.5 per cent this fiscal.

The Washington DC-based agency had in October 2017 lowered India’s growth forecast reflecting “lingering disruptions associated with the currency exchange initiative introduced in November 2016, as well as transition costs related to the launch of the national goods and services tax.”

In April, the IMF had pegged India’s GDP growth at 7.2 per cent for 2017 and at 7.7 per cent in 2018.

In contrast, China’s growth is expected to slow down from 6.8 per cent in 2017 to 6.6 per cent in 2018 and further to 6.4 per cent in 2019.

Global economy

The IMF is, however, more bullish about the global economy and has scaled up its forecast for world output to 3.9 per cent each in 2018 and 2019, which is 0.2 percentage points higher than its estimate in October.

For 2017, it has raised its estimate for global growth by 0.1 percentage points to 3.7 per cent.

“The revision reflects increased global growth momentum and the expected impact of the recently-approved US tax policy changes,” it said.

The US tax policy changes are expected to stimulate activity, with the short-term impact in the US mostly driven by the investment response to the corporate income tax cuts, said the IMF.

It has significantly raised the growth forecast for the US to 2.3 per cent in 2017, 2.7 per cent in 2018 and 2.5 per cent next year.