The International Monetary Fund (IMF) has forecast that India’s economic growth for 2017 and ’18 will be slower than what they had earlier projected.

In its latest World Economic Outlook, the IMF expects India to grow at 6.7% in 2017 and 7.4% in 2018, which are 0.5 and 0.3 percentage points less than the projections earlier this year, respectively.

It has cited the ‘lingering impact’ of demonetization and the newly introduced Goods and Services Tax (GST) for lowering the forecast. “In India, growth momentum slowed, reflecting the lingering impact of the authorities’ currency exchange initiative as well as uncertainty related to the mid-year introduction of the country-wide GST,” the report said.

As for GST, the IMF said it is likely to take a toll on GDP growth in the short term, but this indirect tax reform along with other initiatives of the federal government will raise India’s growth rate to more than 8% in the medium term.

Regarding emerging markets and developing economies, IMF sees a higher domestic demand in China and continued recovery in key emerging market economies supported by growth in the first half of 2017.

IMF also expects the world economy to pick up and grow faster than earlier calculations, in 2017 and 2018. The IMF has revised upwards global growth projections to 3.6% for this year and 3.7% for next — in both cases 0.1 percentage point above previous forecasts.