UNCTAD pegs GDP growth at 7% in 2018; China remains stagnant at 6.7%

India's gross domestic product (GDP) growth may stop at 7 per cent in 2018, according to the United Nations Conference on Trade and Development. The forecast comes on the heel of a nine-quarter high growth of 8.2 per cent in the April-June quarter (Q1) of 2018-19 (FY19).

In its Trade and Development Report 2018, the United Nations agency on Wednesday said huge volumes of bad debt in the banking set risked derailing credit expansion and ultimately investment and economic growth.

"Growing demand for exports has led to a moderate recovery in industrial production although the effects of demonetisation are still evident in private consumption trends within the economy," the report pointed out. It added that while the resulting increase in capacity utilisation has helped the manufacturing sector, a continuous deceleration in growth has plagued the primary sectors.

While the latest slide in the value of the rupee made it the worst performing currency in South and South East Asia but Turkey, Argentina and others have seen the largest global slide.

On the other hand, the growth forecast for India's northern neighbour China remained stagnant at 6.7 per cent, slightly down from 6.9 per cent in 2017.

Economic revival uneven after global financial crisis

The study focused on the after-effects of the 2008 global financial crisis and concluded that global economic recovery has remained erratic over the past decade. The distribution of recovery has also remained significantly unequal. "Among the few nations that have seen significant recovery is the US, which is now refusing to share the benefits of growth", C P Chandrasekhar, Professor at Jawaharlal Nehru University said, presenting the report.

Also, the report suggested global debt has widened despite no significant rise in private investment. This happened at a time when the rate of increase in stock prices have been much more than the increase in average wages globally, therefore signifying a disconnect in economic growth. The growth of monopolies in both services and manufacturing industries worldwide have fed onto this, the report said. This has led to most of the export segments in various major nations being dominated by fewer players, Chandrasekhar added. 

India is currently staring at a ballooning trade deficit on the export side. According to UN statistics, few countries have benefited from export growth as compared to China which has secured the largest share of value added manufacturing exports.