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Despite demonetisation and GST, India becomes fastest growing economy in 2018: IMF

The International Monetary Fund (IMF) released a report, which affirms that India will become the fastest growing economy in 2018. The growth rate is expected to rise from 7.4 per cent to 7.8 per cent in 2019 as the economy is showing positive signs.

India has proved to be one of the most resilient nations, despite the infamous backlash of demonetisation, introduction of Goods and Services Tax.

The IMF’s Asia Regional and Pacific Economic Outlook report said: “The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.”

The forum appreciated the country for medium-term consumer price index inflation “is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting banda of four per cent with a plus or minus two per cent change”, the report said.

The report said: “In India, given increased inflation pressure, monetary policy should maintain a tightening bias.”

“The current deficit in fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows,” the report said.

The IMF urged the countries in the region to follow conservative policies “aimed at building buffers and increasing resilience” and push ahead with structural reforms.

Bangladesh is following India’s footsteps and is the second fastest-growing economy in South Asia with a growth rate of seven per cent for 2018 and 2019.

After Bangladesh, Sri Lanka is taking a queue with four per cent growth rate in 2018 and 4.5 in 2019.

Lastly, Nepal which showing a downward trend by plunging from five per cent in 2018 to four per cent in 2019.

Overall, Asia contributes 60 per cent of the global growth and three-quarters of this comes from India and China, which is expected to grow 6.6 per cent in 2018 and 6.4 per cent in 2019, it said.

The medium term said the report said “downside risks dominate” and it is going exert pressure on global financial conditions, which will show a shift toward protectionist policies, and an increase in geopolitical tensions.

IMF stands for the International Monetary Fund, an organisation whose “primary purpose is to ensure the stability of the international monetary system-the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. The Fund’s mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.”

It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties, and giving practical help to members,” the official website said.