India’s economy is projected to grow 7.6 per cent in fiscal year 2018-19, remaining the fastest growing economy
in the world, as robust private consumption and benefits from past reforms help the country’s GDP gain momentum
but sustained recovery in private investment remains a crucial challenge, according to a UN report. The UN
World Economic Situation and Prospects (WESP) says the GDP growth in India is expected to climb to 7.5 and 7.6
per cent in fiscal years 2017-18 and 2018-19 respectively. This is a substantial recovery from the 6.7 per cent
growth India registered in fiscal year 2017.
"Among the major economies, growth in India is gaining momentum, underpinned by robust private consumption, a
slightly more supportive fiscal stance and benefits from past reforms," the report says. It adds that although
capital spending has shown signs of revival, a more widespread and sustained recovery in private investment
remains a crucial challenge in India. In China, growth is expected to remain solid, supported by robust
consumer spending and supportive fiscal policies. Amid ongoing structural reforms, growth in the Chinese
economy is projected to gradually moderate from 6.9 per cent in 2017 to 6.5 per cent in 2018 and 6.3 per cent
in 2019. While ongoing efforts to address financial vulnerabilities will contribute to more sustainable
medium-term growth, the authorities face the policy challenge of ensuring that associated deleveraging does not
derail growth in the short term.
The report adds that growth in the world economy is surpassing expectations and global GDP is now expected to
expand by more than three per cent this year and in 2019, reflecting strong growth in developed countries and
broadly favourable investment conditions. However rising trade tensions, heightened uncertainty over monetary
policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress, according to
the report. World economic growth is now forecast to reach 3.2 per cent both in 2018 and 2019, an upward
revision by 0.2 and 0.1 percentage points, respectively.
This revised outlook reflects further improvement in the growth forecast for developed economies due to
accelerating wage growth, broadly favourable investment conditions, and the short-term impact of a fiscal
stimulus package in the US. World trade growth has also accelerated, reflecting a widespread increase in global
demand. Many commodity-exporting countries will also benefit from the higher level of energy and metal prices.
While the modest rise in global commodity prices will exert some upward pressure on inflation in many
countries, the report notes that inflationary pressures remain contained across most developed and developing
regions, the report said.