NEW DELHI: The International Monetary Fund (IMF) on Tuesday lowered India's growth forecast for 2017 to 6.7% from its earlier estimate of 7.2%, citing lingering impact of demonetisation and transition cost to the Goods & Services Tax (GST).
But, India is expected to regain the fastest growing major economy tag next year when it is forecast to grow 7.4% (slower than earlier estimate of 7.7%), higher than China's 6.5%. IMF also expects the Indian economy to grow 8% in the medium term on the back of reforms undertaken so far.
The upward revision to the 2017 forecast — 0.2 percentage point relative to the April 2017 WEO — reflects the stronger-than-expected outturn in the first half of the year underpinned by previous policy-easing and supply-side reforms. It said global upswing in economic activity is strengthening and global growth, which in 2016 was the weakest since the financial crisis at 3.2%, is projected to rise to 3.6% in 2017 and to 3.7% in 2018. The forecasts for both 2017 and 2018 are 0.1 percentage point stronger compared with the April 2017 WEO forecast.