IMF projects decline in India's growth rate this year
Washington, Apr 11 (UNI) The International Monetary Fund (IMF) has projected a growth rate of 7.8 per cent for India in 2008, which will be less than the growth it had recorded in the previous three years.
According to the World Economic Outlook (WEO), the economic survey of the IMF, which was released here today, India's growth rates this year will be 8.4 per cent. For India the IMF statistics have been a robust 9.2 per cent for 2005 and 2006.
The WEO has, however, pointed to a gloomy global economy that expanded vigorously in 2006, growing by 5.4 per cent ; and in the United States, the expansion slowed in the face of headwinds from a sharp downturn in the housing market, but oil price declines since August have helped to sustain consumer spending.
''Among emerging market and developing countries, rapid growth was led by China and India, while momentum was sustained across other regions as countries benefited from high commodity prices and continued supportive financial conditions.'' The IMF document says emerging market and developing countries are expected to continue to grow strongly, albeit at a somewhat slower pace than in 2006.
These economies will continue to draw support from benign global financial conditions and commodity prices that remain high notwithstanding recent declines.
It points out that China's growth is projected to remain rapid in 2007 and 2008, albeit a little below the torrid pace in 2006, while India's economy should also continue to grow rapidly.
The IMF says the real GDP growth in Emerging Asia was 8.7 per cent in 2005, 8.9 per cent in 2006 but it expected to come down to 8.4 per cent this year and tapering off at 8 per cent in 2008.
South Asia which had 8.7 per cent growth in 2005 and 2006 is expected to come down to 8.1 per cent this year and drop further to 7.5 per cent in 2008, it says.
The Fund is making the point that many emerging market and developing countries face the challenge of maintaining stable macro-economic and financial conditions in the face of strong foreign exchange inflows.
Exchange rates in several Asian countries have appreciated markedly over the past six months, but China would benefit from a more flexible regime that provides a more secure basis for monetary policy management.
''Activity in emerging Asia continues to expand at a brisk pace, led by very strong growth in both China and India. In China, real GDP expanded by 10.7 per cent in 2006 on the strength of solid investment and export growth, although the pace of fixed asset investment cooled in the second half of the year in response to monetary policy tightening.
In India, real GDP growth of 9.2 per cent was supported by the strength of consumption, investment, and exports" the IMF said.
Fiscal balances are expected to continue to strengthen in most countries in the region in 2007. Nevertheless, policy priorities differ across countries.
''Securing sustainable fiscal positions and reducing the vulnerabilities associated with high public debt and budget deficits remain key in India, Pakistan, and the Philippines (notwithstanding substantial progress in reducing debt over the last few years in the latter two)'' the IMF added.
UNI