OECD report says India's GDP growth will overtake China's in 2018

Chinese President Xi Jinping, left, and Indian Prime Minister Narendra Modi

India’s GDP growth rate will overtake China’s in the next financial year as per the Interim Economic Outlook report released by Organisation for Economic Co-operation and Development (OECD).

The OECD report maintains that the economy will regain its momentum and achieve a growth of 7.2 percent in 2018, overtaking China that will see a growth rate of 6.6 percent during the same period.

OECD's report that was published on Wednesday was optimistic about the immediate future of the global economy as well. As per the data the global GDP growth rate is projected to rise from 3 percent in 2016 to 3.5 percent in 2017 and later to 3.7 percent in 2018.

OECD, founded in 1960 is an economic organisation having 35 member nations. The organisation releases data and reports that highlights economic practices and policies of various nations and the future of global and regional economic growth.

India’s economy to grow after a temporary glitch

Though India’s economy may suffer a temporary setback due to the introduction of new reforms like Goods and Services Tax and demonetisation, the data predicts it will aid the growth in the long term.

“In India, the transitory effects of demonetisation and of the implementation of the GST have led to a downward revision in 2017 growth projections, while business investment has remained weak. In the longer run, the GST is expected to boost investment, productivity, and growth.” the report said.

As per the official government data, the Indian economy grew 5.7 percent in April-June which was sharply lower than last year’s 7.9 percent expansion in the same quarter.

US and UK to suffer despite progress in the Eurozone

For the US, the data predicted a growth rate below the global average. As per the report, the US is set to grow at 2.1 percent in 2017 and 2.4 percent in 2018. The data cited Trump administration’s failure in implementing tax reforms behind this.

While the Eurozone is predicted to grow to 2.1 percent in 2017 as opposed to 2016’s 1.8 percent, the biggest setback will come in the UK which, following the ongoing withdrawal from the European Union, is going to see a slump in growth. As per the report, UK's GDP growth which was 1.8 percent in 2016 will decline to 1.6 percent this financial year and to just 1 percent in 2018.

The report however also cautioned the countries from adopting protectionist policies and shielding from reforms. Only by expanding productivity can the strong and sustained medium-term global growth be secured, the report said.