The Indian economy can grow at a rate of 7.2% in 2018 and 7.4% in 2019 despite a slowdown observed this year, the United Nations has said. The organisation published these observations in its annual report – World Economic Situation and Prospects 2018 – that was released on Monday.

Robust private consumption, public investment and structural reforms would fuel the growth, the United Nations said. However, it warned that the government should be wary of sudden withdrawal of capital due to “monetary policy normalisation” in developed countries.

However, inflation would be 4.5% in 2018 and 4.8% in 2019, slightly above the Reserve Bank of India’s target of 4%. Retail inflation increased to a 15-month high of 4.88% in November, according data released by the Central Statistics Office on Tuesday.

The UN report said that decline in private investment was a key macroeconomic concern. “Gross fixed capital formation as a share of GDP has declined from about 40% in 2010 to less than 30% in 2017 amid subdued credit growth, low capacity utilisation in some industrial sectors and balancesheet problems in the banking and corporate sectors,” said the report.

Growth in the global economy is expected to remain 3% over the next two years, the UN said.