India to grow at 7.4% in 2018, global growth rate revised upwards: IMF

The IMF increased its US growth forecast a whopping 0.6 points from October to 2.5 percent. Photograph:( Reuters )

WION Web Team New Delhi, Delhi, India Jan 22, 2018, 03.05 PM (IST)

International Monetary Fund's World Economic Outlook data released on Monday revised the global growth rate upwards to 3.9 per cent in both 2018 and 2019 while India's growth projection has been pegged at 7.4 per cent for 2018 and 7.8 per cent for 2019 respectively. 

Global economies are recovering simultaneously and at a stronger pace, and will get at least a short-term boost from the US tax cuts, the IMF said. 

In the latest update to the IMF's World Economic Outlook, nearly all the forecasts for 2018 and 2019 were revised upward compared to the October edition.

However, the fund warns that exuberant financial markets could be due for a reversal.

The global economy is now expected to grow 3.9 percent this year and next, two-tenths higher than the previous estimate, and up from 3.7 percent in 2017.

Advanced economies are seeing solid simultaneous growth, and the US tax reform passed just before Christmas will have a measurable effect, at least for a couple of years.

"The revision reflects increased global growth momentum and the expected impact of the recently approved the US tax policy changes," the IMF said.

"Some 120 economies, accounting for three-quarters of world GDP, have seen a pickup in growth in year-on-year terms in 2017, the broadest synchronized global growth upsurge since 2010."

And for 2019, the IMF increased its US growth forecast a whopping 0.6 points from October to 2.5 percent.

The corporate tax cuts are seen driving investment, which could add growth of 1.2 percent to the US economy through 2020, while also contributing to the faster expansion in US trading partners like Mexico.

The UK economy, facing separation from the European Union, was also one of the very few that did not see an upward revision. The 2018 forecast was unchanged at 1.5 percent.

Japan saw a rare and large upgrade of five-tenths for this year to 1.2 percent.

China saw a more modest improvement of just one-tenth to 6.6 percent.

"The current cyclical upswing provides a unique opportunity for structural and governance reforms," the IMF said, adding, "policymakers should guard against the temptation to defer reforms and budgetary adjustments for later."