Indicating that India’s declining growth has bottomed out, International Monetary Fund (IMF) today said the country’s GDP is likely to improve to 5.7 per cent in 2013 and further to 6.2 per cent a year after.
For Asia as a whole the economic growth is likely to be 5.7 per cent this calender and 6 per cent in 2013, IMF said in its ‘Regional Economic Outlook: Asia and Pacific’ report.
As per IMF’s projections, India’s real economic growth was 11.2 per cent in 2010, 7.7 per cent in 2011 and 4 per cent in the last calender.
It further said that in South Asia, “notwithstanding a modest growth recovery in India on a more favorable external demand environment, deep-rooted structural challenges are expected to exert a substantial drag on potential growth while keeping inflation at elevated levels by regional standards“.
The Washington headquartered multi-lateral agency said medium-term growth prospects for China, India, and other emerging Asia economies have recently become focus of economic debates in the region.
“Indeed, growth in both China and India has declined since the global financial crisis,” it said.
On inflation, IMF said that across much of Asia, headline inflation slowed markedly through 2012, and in many cases by some 2 percentage points.
“...the notable exceptions were India, Indonesia, and, to a lesser extent, Thailand,” it added.
The report said, for countries where inflationary pressures have been elevated, vigilance on inflation will pay dividends for long-term growth.
“For example, in India, monetary policy can best support growth by putting inflation on a clear downward trend,” it said.
As per the report, a drop in private investment over rising policy uncertainty exacerbated supply bottlenecks in India, which contributed to headline inflation that was high compared to most other Asian economies in 2012.