IMF chief Christine Lagarde said the Indian economy was on a “very solid track” in the mid-term, days after the International Monetary Fund lowered its growth forecast for the current and the next year.
Short-term slowdown
Describing the two major recent reforms — demonetisation and Goods and Services Tax (GST) — as a monumental effort, she said it was hardly surprising that there “is a little bit of a short-term slowdown” as a result.
The IMF last week lowered India’s growth projection to 6.7% in 2017, 0.5 percentage points less than its previous two forecasts in April and July, attributing it to demonetisation and introduction of the GST.
It also lowered the country’s growth for 2018 to 7.4%, 0.3 percentage points less than its previous two projections in July and April. India’s growth rate in 2016 was 7.1%, which saw an upward revision of 0.3 percentage points from its April report.
“Turning to India...we have slightly downgraded India; but we believe that India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in the last couple of years,” the IMF managing director said.
“But for the medium term, we see a very solid track ahead for the Indian economy,” she said.
“We very much hope that the combination of fiscal, because the deficit has been reduced and inflation has been down significantly, and the structural reforms will actually deliver the jobs that the Indian population, particularly the young Indian people expect in the future,” Ms. Lagarde added.
