Global Investor

Growth to rebound

Arvind Jayaram | Updated on November 19, 2014


IMF says India will grow at 5.4% this year

The Indian economy is set to grow by 5.4 per cent in 2014 and 6.4 per cent in 2015, according to the International Monetary Fund’s latest World Economic Outlook (WEO) report. In 2013, the economy is estimated to have expanded by 4.4 per cent.

If the IMF’s projections turn out to be accurate, this would trump the projected global growth rate of 3.6 per cent this year and 3.9 per cent in 2015 and would position India as the second-fastest trillion-dollar economy worldwide, after China.

India’s larger neighbour, China, would achieve an even faster pace of growth, expanding by 7.5 per cent this year and 7.3 per cent in the next, as per the IMF projections. But neighbours in the sub-continent and the Asia region, such as the Philippines and Vietnam, are likely to outperform India, given the IMF’s forecast of 6.7 per cent growth in 2014 and 6.8 per cent in 2015 for emerging and developing Asian nations.

The report also had some positive forecasts on the inflation situation in the country, predicting that the rate of price rise would moderate further in the coming months. However, it warned that the strategy of interest rate hikes to curb inflation might exacerbate external vulnerabilities for the country, particularly on the currency front, and could weigh on growth prospects.

With respect to global trends, the WEO asserts that activity has broadly strengthened and is expected to improve further in 2014-15, with much of the impetus coming from advanced economies. Activity in many emerging market economies has disappointed in a less than favourable environment, even though they continue to contribute more than two-thirds of global growth. Their output is expected to be lifted in the coming year by strong exports to advanced economies.

Published on April 13, 2014

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