Published: Tue, April 17, 2018
Money | By Armando Alvarado

International Monetary Fund expects India's economy to grow at 7.4% in 2018

International Monetary Fund expects India's economy to grow at 7.4% in 2018

According to the IMF's World Economic Outlook (WEO) report, the country's economic growth is expected to be 7.8 per cent in 2019.

The upgrade to global growth for this year to 3.9% potentially makes 2018 the strongest year since 2011, when the economy was rebounding from the financial crisis.

There are warnings about the risks ahead, lurking dangers that could lead to the global economy falling short of the IMF's forecasts, in addition to the concerns about trade.

"Against that positive backdrop, the prospect of a similarly broad-based conflict over trade presents a jarring picture", he told reporters at a news conference here.

"We also project near-term improvements for several other emerging market and developing economies, including some recovery in commodity exporters".

Mr Obstfeld said the "get tough" approach by the USA in trade talks with China, Mexico Canada and others "will do little to change the multilateral or overall United States external current account deficit, which owes primarily to level of aggregate U.S. spending that continues to exceed total income".

Global growth forecasts were maintained at 3.9 per cent for this year and next, up from a stronger-than-expected expansion of 3.8 in 2017 thanks to a rebound in trade. This is the highest share of countries experiencing a year-over-year growth pickup since 2010.

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"However, advancement of the outstanding reforms is critical for reinvigorating economic growth and making it more inclusive", said the International Monetary Fund.

"Once the cyclical upswing and USA fiscal stimulus have run their course, prospects for advanced economies remain subdued, given their slow potential growth". Compared to the January WEO report, the forecasts for the economy growth of the CIS member countries remained unchanged.

Referring to tariffs on steel and aluminium and a range of Chinese products announced by US President Donald Trumps' administration and China's counter-tariffs on US imports last month, the International Monetary Fund noted that "the first shots in a potential trade war have now been shot".

"The prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely", Obstfeld said.

"That major economies are flirting with trade war at a time of widespread economic expansion may seem paradoxical - especially when the expansion is so reliant on investment and trade", Obstfeld added.

"The IMF welcomed New Zealand's continued support of open trade and our multi-lateral trade framework saying that, as one of the initial signatories of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), New Zealand will benefit from increased market access and new growth opportunities".

He said Donald Trump's tax cuts would suck imports into the U.S. and increase the size of the trade deficit 2019 by $150bn - a trend that could exacerbate trade tensions.

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