The International Monetary Fund (IMF) in its World Economic Outlook(WEO) report has said that India is projected to grow at 7.3% in 2019 and 7.5% in 2020.The growth will be supported by the continued recovery of investment and robust consumption,thus remaining the fastest growing major economy of the world.
IMF expects inflation to remain below the Reserve Bank of India’s threshold of 4% in the current fiscal at 3.9% and marginally exceed at 4.2% next year. Further,Current account deficit is expected to be around 2.5% of GDP.Current account measures the flow of goods,services and investments into and out of the country.We run into a current account deficit if the value of the goods and services we import exceeds the value of those we export.
The International Monetary Fund (IMF) has also projected that global growth will be 3.3% in 2019 as against 3.6% in 2018 and 4% in 2017.This lower projection is due to (a)lower global expansion in the second half of 2018 caused by U.S.-China trade tensions (b)macroeconomic stress in Turkey and Argentina (c)tighter credit policies in China and (d)financial tightening in advanced economies.
IMF has also said that the continued implementation of structural and financial sector reforms with efforts to reduce public debt remain essential to secure the Indian economy’s growth prospects.Further,the report emphasized on enhancing governance of public sector banks and reforms to hiring and dismissal regulations that would incentivize job creation and absorb the country’s large demographic dividend.
IMF has also praised the Indian government for taking steps to strengthen financial sector balance sheets through accelerated resolution of non-performing assets (NPAs) under a simplified bankruptcy framework.