With robust private consumption, a slightly more supportive fiscal stance and benefits from past reforms, the United Nations (UN) in its mid-2018 report has projected Indian economy to grow at 7.6% in the fiscal year 2018-19. It added that the country will remain the fastest growing economy in the world. But, it also said that although capital spending has shown signs of revival, a more widespread and sustained recovery in private investment remains a crucial challenge in the nation. For fiscal year 2017-18, it said that gross domestic product (GDP) growth is expected to climb to 7.5% from 6.7% growth registered in FY17.
The report titled World Economic Situation and Prospects (WESP) stated that growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than 3% this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions. However, it said that rising trade tensions, heightened uncertainty over monetary policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress. World economic growth is now forecast to reach 3.2% both in 2018 and 2019, an upward revision by 0.2 and 0.1 percentage points, respectively.
As per the report, 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 noted that inflationary pressures remain contained across most developed and developing regions.
The report further highlighted that the trade tensions that has been building among many of the world's largest economies. Major trade agreements such as NAFTA have undergone prolonged renegotiation, and a range of tariff and trade barriers have been put forward by major economies. In addition to these measures taken outside the auspices of the World Trade Organisation, a rising number of disputes have been raised within the WTO in recent months, including cases involving Australia, Canada, China, India, Pakistan, South Korea, Russia, Ukraine, the UAE, the US and Vietnam. It added that a move towards a more fragmented international trade landscape could reverse recent improvement in the global economy.