Washington: The International Monetary Fund (IMF) reaffirmed that India will be the fastest-growing major economy in 2018, with a growth rate of 7.4 percent that rises to 7.8 percent in 2019 with medium-term prospects remaining positive.

The IMF’s Asia and Pacific Regional Economic Outlook report said that India was recovering from the effects of demonetisation and the introduction of the Goods and Services Tax and “the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption.”

Medium-term consumer price index inflation “is forecast to remain within but closer to the upper bound of the Reserve Bank of India’s inflation-targeting band” of four percent with a plus or minus two percent change, the report said. However, it added a note of caution: “In India, given increased inflation pressure, monetary policy should maintain a tightening bias.”

It said the consumer price increase in 2017 was 3.6 percent and projected it to be five percent in 2018 and 2019. “The current account deficit in the fiscal year 2017-18 is expected to widen somewhat but should remain modest, financed by robust foreign direct investment inflows,” the report said.

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