IMF Expects India to Retain World’s Fastest Growing Economy Tag

India to grow at 7.5%, faster than China, says IMF.

The Indian economy is expected to grow faster than other major emerging economies, says the IMF. (Photo: iStock)

Economy on Track?

• IMF projects a growth rate of 7.5 per cent for India vs 6.3 per cent for China in 2016
• Inflation in India is expected to decline further in 2015
• Forecast assumes that policy action will be consistent with reducing vulnerabilities from recent rapid credit and investment growth
• Global growth for 2015 is projected at 3.1%

The Indian economy is expected to grow faster than other major emerging economies, the IMF said on Tuesday, projecting a growth rate of 7.5 per cent for India in 2016 as against China’s 6.3 per cent.

“Growth in India is expected to rise above the rates in other major emerging market economies,” the IMF said in its latest World Economic Outlook Update released here.

India’s growth is expected to strengthen from 7.3 per cent this year and last year to 7.5 per cent next year. Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower commodity prices.
— IMF

On the other hand, growth in China is expected to decline to 6.8 per cent this year and 6.3 per cent in 2016.

Previous excesses in real estate, credit, and investment continue to unwind, with a further moderation in the growth rates of investment, especially that in residential real estate, it said.

The forecast assumes that policy action will be consistent with reducing vulnerabilities from recent rapid credit and investment growth and hence not aim at fully offsetting the underlying moderation in activity, it said.

Global growth for 2015 is projected at 3.1 per cent, 0.3 percentage point lower than in 2014, and 0.2 percentage point below the forecasts in the July 2015 World Economic Outlook (WEO) Update.

In advanced economies, growth is expected to remain robust and above trend through 2016 and contribute to narrowing the output gap.

According to the report, in India, inflation is expected to decline further in 2015, reflecting the fall in global oil and agricultural commodity prices.