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IMF cuts India growth forecast for 2018 to 7.3%

The International Monetary Fund (IMF) in its latest World Economic Outlook (WEO) update has projected growth rate of 7.3% in 2018 and 7.5% in 2019 for India as against 6.7% in 2017. This makes India, fastest growing country among major economies in 2018-19 and 2019-20.

Key Facts

India will grow by 7.3% in 2018-19 against earlier estimate of 7.4%, slightly less — 0.1 percentage point in 2018. In 2019-20, it will grow by 7.5% against earlier estimate of 7.8%. This reflects negative effects of higher oil prices on domestic demand and faster than-anticipated monetary policy tightening due to higher expected inflation.

Despite India’s slight downgrade in the projections, it continues to outperform China. Growth in China is projected to moderate from 6.9% in 2017 to 6.6% in 2018 and 6.4% in 2019. This is mainly because of regulatory tightening of financial sector takes hold and external demand softens.

The global growth is projected to reach 3.9% in 2018 and 2019, in line with forecast of April 2018 WEO. Growth prospects in emerging market and developing economies is becoming more uneven, amid rising oil prices, higher yields in United States Treasury bonds, escalating trade tensions and market pressures on currencies of some economies with weaker fundamentals.

World Economic Outlook (WEO)

WEO is survey conducted and published by IMF. It is published biannually and partly updated two times a year. It portrays the world economy in the near and medium context, with growth projections for up to four years into the future. WEO forecasts include key macroeconomic indicators, such as GDP, inflation, fiscal balance and current account of more than 180 countries around the globe. It also deals with major economic policy issues.

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Global Innovation Index (GII): India ranks 57th

In recently released Global Innovation Index (GII) 2018, India was ranked 57th among 130 countries. It was 11th edition of GII and was jointly released by Cornell University, INSEAD and World Intellectual Property Organisation (WIPO).  This year, India has moved up 3 places as compared to 60th rank in GII 2017 and emerged as top-ranked economy in Central and South Asia.

Key Highlights

India

India has maintained its top place in central and south Asia region. It has consistently moving up on global ranking from 81st in 2015 to 57th this year. In fact, it has climbed up the list third year in row. It ranked at 66th position in 2016 and 60th last year.

Strengths: These indicators have helped India to improve its ranking. It includes India’s human capital (graduates in science & engineering), growth rate of GDP per worker, exports of information and communication technology (ICT) and services, productivity growth and creative goods exports etc.

Weakness: India has fared badly on indicators such as ease of starting business, political stability and safety, overall education and environmental performance

Global Innovation Index (GII)

The GII global ranking is published by World Intellectual Property Organisation (WIPO) – a specialized agency of United Nations in association with Cornell University and graduate business school INSEAD. It ranks nations based on 80 indicators, ranging from intellectual property filing rates to R&D, online creativity, mobile application creation, computer software spending, education spending, scientific & technical publications and ease of starting business.

India’s Confederation of Indian Industry (CII) is one of the knowledge partners which assists GII team in bringing out the annual ranking. GII is published annually since 2007 and is considered leading benchmarking tool for business executives, policy makers and others seeking insight into state of innovation around the world. It is being used by them to evaluate progress on continual basis.

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