With 6.6% growth in 2016, India loses world’s fastest-growing economy mantle to China: IMF

As per the latest economic outlook on India by the International Monetary Fund, the liquidity crunch caused by the government's demonetisation drive has cost India the mantle of world’s fastest-growing large economy in 2016.

IMF said that the slowdown effect caused by high-value currency pullout was temporary in nature and Indian economy would witness a spurt in their economic growth in 2017.

India’s economic growth slipped to 6.6 percent last year from 7.6% in 2015, according to the fund’s latest World Economic Outlook, which estimates that China’s economy grew by 6.7% in 2016. The fund expects India’s growth to bounce back to 7.2% this year and accelerate to 7.7% in 2018. China, meanwhile, is projected to continue decelerating, to 6.5% in 2017 and 6.0% in 2018. 

The IMF said it trimmed its 2016 forecast for India by one percentage point “primarily” because consumers tightened their purse-strings after November’s currency invalidation.