Men carry Indian national flags while riding motorcycles in Lucknow, Uttar Pradesh, India (Photographer: Prashanth Vishwanathan/Bloomberg)

Davos 2019: India’s World-Beating Growth Run To Continue, IMF Says

India is expected to remain the fastest growing major economy in the world for the next two years even as global growth slows down.

That’s according to the International Monetary Fund that sees India’s gross domestic product growing at 7.5 percent in 2019 and 7.7 percent in 2020. The global economy, however, is expected decelerate to 3.5 percent in 2019 from 3.7 percent last year.

“India’s economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease,” the IMF said in its World Economic Outlook.

IMF said India’s growth in 2018 is expected to be at 7.3 percent, which is 10 basis points higher than the government’s own estimate. That’s still the fastest pace in three years as the country recovers from the twin shocks of demonetisation and an overhaul of its indirect tax structure.

There are a number of risks to the IMF’s outlook. Cross-border trade tensions are escalating and global trade, investment and output remains under threat from that uncertainty, it said.

Also read: IMF Sees Weakest Global Growth in Three Years as Europe Slows

Besides, this will have an impact on financial market sentiment. “With momentum past its peak, risks to global growth skewed to the downside, and policy space limited in many countries, multilateral and domestic policies urgently need to focus on preventing additional deceleration and strengthening resilience.”

A range of triggers beyond escalating trade tensions could spark a further deterioration in risk sentiment with adverse growth implications, especially given the high levels of public and private debt.
IMF World Economic Outlook

The IMF has also urged policymakers to cooperate and work towards resolving these issues that could seriously hurt global growth in the longer run. It added that an “overarching” challenge for all countries is mitigating climate change to lower its “devastating” humanitarian and economic effects. “Failure to do so would further destabilise a slowing global economy.”