India to lose fastest-growing economy tag? IMF, ADB slash growth forecast

The World Bank reduced its FY18 India growth estimate to 7% from 7.2% earlier; IMF projected India would growth at 6.7%

Demonetisation and Goods and Services Tax (GST) seem set to hamper India's growth in 2017-18. The International Monetary Fund (IMF) is the latest to trim its 2017-18 economic growth forecast for India. Even as IMF raised its economic growth projections for most major economies, it did the opposite for India. Also, its projection of 6.7 per cent growth for India is lower the 6.8 per cent for China. That means, IMF sees India losing its tag of the fastest-growing major economy.

“The growth projection for 2017-18 has been revised down to 6.7 per cent, reflecting still lingering disruptions associated with the currency exchange initiative introduced in November 2016, as well as transition costs related to the launch of the GST in July 2017,” IMF said in its World Economic Outlook released on the occasion of the Fund-Bank annual meeting in Washington on Tuesday. 

Earlier, the Organisation for Economic Co-operation and Development (OECD) had also lowered India’s growth forecast for the current financial year, amid the impact of GST and demonetisation. Even the Asian Development Bank (ADB) had slashed India’s GDP growth forecast citing weakness in private consumption, manufacturing output and business investment. The World Bank had reduced its estimate to 7 per cent.  

Here is a list who expects what economic growth rate for India in 2017-18:

IMF

IMF projected India to grow at 6.7 per cent in 2017 and 7.4 per cent in 2018, which are 0.5 and 0.3 percentage points less than the projections earlier this year, respectively. 

ADB

The Asian Development Bank (ADB) also slashed India’s GDP growth forecast for the current financial year to 7 per cent from 7.4 per cent. 

OECD

In 2017-18, India's growth is forecast to be 6.7 per cent compared to June projection of 7.3 per cent, as per the OECD Interim Economic Outlook. In contrast, China’s economy got a 0.2 per cent lift from its earlier assessment to 6.8 per cent for 2017. 

World Bank

India’s GDP may slow from 8.6 per cent in 2015 to 7.0 per cent in 2017 because of disruptions by demonetisation and the GST, the World Bank stated. It added that subdued private investment due to internal bottlenecks could put downside pressures on the country’s potential growth. The World Bank reduced its estimate to 7 per cent from 7.2 per cent earlier.