India moved up a notch to overtake Japan and become the fifth-most attractive investment destination in a global CEOs’ survey, even as the IMF said the country would again emerge as the fastest growing major economy in 2018, clocking 7.4% growth amid signs of an improving economic environment.
In a survey conducted by PricewaterhouseCoopers, chief executives said excluding their home market, they were most likely to invest in the US, followed by China, Germany and the UK. The world’s largest economy expanded its lead as corporate chiefs expect more rapid growth in the US.
The survey will come as a booster for PM Narendra Modi, who will court international investors in Davos in a bid to get more investment into the country, especially in the manufacturing sector that has remained sluggish and is crucial to job creation.
Aided by opening up of several key sectors over the last few years, foreign direct investment in India surged 17% to over $25 billion during the first half of the current financial year, even as private investment has remained muted due to excess capacity and high financial stress. It had topped $60 billion for the first time in 2016-17 (an increase of around 8%) but remains less than half of China’s $137 billion in 2017.
IMF on Monday reiterated its earlier estimate that India will grow 7.4% in 2018 and accelerate to 7.8% in 2019 from 6.7% last year. In contrast, China, which IMF suggested grew 6.8% last year, is estimated to slow down to 6.6% in 2018 and further to 6.4% next year.
At a press conference, IMF chief Christine Lagarde urged global policymakers to “fix the roof ” while the going was good, calling for a more inclusive development strategy as nearly one-fifth of developing and emerging economies saw their per capita income decline in 2017.
She also asked for structural and fiscal reforms and called upon leaders to put together a robust global collaboration to fight corruption, improve conditions for trade, stop tax evasion and prevent catastrophic climate change.