The International Monetary Fund has said that a strong economic partnership between India and China is the need of the hour, PTI reported on Friday. IMF’s Deputy Managing Director Tao Zhang (pictured above) told the news agency that global cooperation and implementation of the right policies will lead to a sustained, balanced, and inclusive growth. “India and China are currently responsible for half of the global growth, so a strong economic partnership between these two large economies is very important – for their people and for the world,” he said.
Tao also pitched for an open trade system. “The objective of open trade conducted under fair rules that are well enforced is a shared objective,” he added. He warned that “inward-looking” economic policies will affect Asia. “Maintaining openness to trade is very important, especially for Asia,” Zhang said.
The deputy managing director further said that rolling out the Goods and Services Tax will boost the country’s medium-term growth to above 8%. He believes that the economic reforms brought in by the Centre “will support strong and sustainable growth, going forward”. “We are extremely impressed by the work being done [in India], and we expect it will pay off in terms of higher growth in the future,” Tao said, adding that GST will “enhance production and the movement of goods and services across Indian states”.
On April 22, the IMF had said the impact of demonetisation in India had subsided. “Some estimates point to about 75% of the cash being replaced,” Kenneth Kang, IMF deputy director of the Asia-Pacific Department, had said.
In January, the international body had pegged India’s growth rate for 2016 at 6.6% because of the effects of demonetisation. On April 19, IMF had said India will not lose the tag of being the fastest-growing economy in the world to China anytime soon.
Besides, the IMF is keeping a close eye on the economic policies of Donald Trump’s administration in the United States, according to Tao. He told PTI that there is “considerable uncertainty” over specific policies, but details of the various proposals are necessary “to better understand their implications”.
Tao noted that fiscal expansion will boost US economic growth from 2.3% to 2.5%. While he believed this will prove fruitful for the global economy, he warned that it involved risks such as an “inward shift in policies and elevated policy uncertainty, an aggressive rollback of financial regulation and a faster-than-expected tightening of financial conditions”.