India, China Vital for Regional, Global Growth

India and China have been important engines of regional and global economic growth, a top official of International Monetary Fund said Sunday, noting that a strong economic partnership between the two Asian giants would be beneficial.

“For the past several years, India and China have been important engines of regional and global economic growth. In 2017, India and China were responsible for almost half of global growth,” Tao Zhang, IMF deputy managing director, told PTI in an interview ahead of his visit to India.

The IMF, he said, strongly believes that the world benefits if individual countries implement sound stability-oriented macroeconomic policies and reduce barriers to trade and investment.

“A strong economic partnership between India and China would be beneficial, and their collaboration is welcome. The BRICS and G-20 summits are good examples,” Zhang said when asked about the impact these two economies collectively have on the global economy.

The Indian economy now seems to be on its way to recovering from disruptions caused by demonetization and roll-out of goods and services tax, he said. At the same time, the IMF has underscored the significance of reforms in other key sectors like education, health and improving the efficiency of the banking and financial systems.

India’s economy has expanded strongly in recent years, thanks to macroeconomic policies that emphasize stability and efforts to tackle supply-side bottlenecks and structural reforms. Disruptions from demonetization and the rollout of the goods and services tax did slow growth,” Zhang said.

“However, with the economy expanding by 7.2% in the latest quarter, India has regained the title of the fastest-growing major economy,” the IMF official said. Calling this development a “welcome change”, Zhang said the growth prospects remain positive.

For many years, commentators have feared a financial crisis in China. They agonized over a rapid rise in its debt and fault lines in its banking system. They called China’s property market a bubble. They forecast that efforts to rebalance its economy away from an investment binge may lead to disaster.

But China hasn’t collapsed. In fact, it outperformed expectations. China government statistics show gross domestic product growing by 6.9% in 2017, above the 6.5% target set by the government. It was the first increase in growth since 2010.

China’s economy is resilient, said Mark Tan, Senior Director and Head of Greater China Equities at UOB Asset Management.