India will become world's fastest growing economy in 2019-20: IMF

The International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, U.S., April 21, 2017.
The International Monetary Fund logo is seen during the IMF/World Bank spring meetings in Washington, U.S., April 21, 2017. Reuters

India will keep the crown as the world's fastest expanding major economy with a 7.5 per cent growth in 2019-20 fiscal despite a global slowdown, an International Monetary Fund (IMF) report says.

The country's growth is estimated to be 7.3 per cent for the current fiscal and could rise to 7.7 per cent in 2020-21, the World Economic Outlook Update says.

"India's economy is poised to pick up in 2019, benefiting from lower oil prices and a slower pace of monetary tightening than previously expected, as inflation pressures ease," says the report IMF chief economist Gita Gopinath has released in Davos, Switzerland.

Gopinath has sounded an alarm saying the global expansion is weakening "at a rate that is somewhat faster than expected".

The update projects global growth at 3.5 per cent in 2019, less than 0.2 per cent that the October report projected, and 3.6 per cent in 2020, about 0.1 per cent off the earlier estimate.

The risks of a more significant downward correction are increasing, according to her. "While this does not mean we are staring at a major downturn, it is important to take stock of the many rising risks," a media report quoted her as saying.

Gopinath has blamed trade tensions and troubled financial conditions for the bleak outlook. "Higher trade uncertainty will further dampen investment and disrupt global supply chains," she says.

World Bank's earlier growth projection for India match those of the IMF for the current financial year but is lower at 7.5 per cent for 2020-21.

The IMF report says China's growth slipped from 6.6 per cent last year, down from 6.8 per cent in 2017 and is expected to hit 6.2 per cent this year.

China's gross domestic product (GDP) for last year's final quarter eased to 6.4 per cent year on year from 6.5 per cent, in line with analysts' expectations, according to a report in the Strait Times.

China has reported its GDP grew at its slowest pace in 28 years last year. The report blames a weakening domestic demand and a protracted trade dispute with the United States.

The release of the figures coincides with President Xi Jinping's warning that the country faces deep and complicated changes.

Xinhua news agency quoted Xi as saying that the country must maintain its high alert to "black swan" events and fend off "grey rhino" events. The former refers to an unforeseen occurrence that typically has extreme consequences, while the latter is a highly obvious yet ignored threat.