Releases Trade and Development Report 2009
India second fastest growing economy after China
Financial indicators suggest economic recovery
NEW DELHI: With recession and economic slowdown being far from over around the world, the UN body United Nations Conference on Trade and Development (UNCTAD) on Monday projected much lower growth of five per cent for India in 2009 against Reserve Bank of India (RBI) and Government’s forecast of above six per cent in the current fiscal.
Releasing its “Trade and Development Report 2009” in the capital here, UNCTAD report said it expected Indian economy to expand by five per cent in 2009. The economy grew by 6.7 per cent in the financial year 2008-09. In the first quarter of the 2009-10 fiscal, the Gross Domestic Product (GDP) expanded at 6.1 per cent and both RBI and the Prime Minister’s Economic Advisory Council expect GDP to be above six per cent for 2009-10.
However, the UNCTAD report listed India as the second fastest growing economy after China, in the backdrop of the global economy set to shrink by 2.7 per cent in 2009. “The economic winter is far from over: tumbling profits in the real economy, previous over-investment in real estate and rising unemployment will continue to constrain private consumption and investment for the foreseeable future. Even economies that will grow this year, such as those of China and India, are slowing significantly compared to previous years. The crisis is unprecedented in its depth and breadth leaving virtually no country unscathed,” it said.
The report further said improvement of certain financial indicators from their lows reached in the first quarter of 2009, falling interest rate spreads on emerging-market debt and corporate bonds and the rebound in securities and commodity prices were seen as green shoots of economic recovery. However, the likelihood of a recovery in the major developed countries that would be strong enough to bring the world economy back to its pre-crisis growth path in the coming years is quite low, the report said.
UNCTAD has said the growth rate of developed nations is expected to contract by 4.1 per cent in 2009, while for developing countries, it is likely to decelerate from 5.4 per cent in 2008 to 1.3 per cent in 2009, implying a reduction of average per capita income.
China and India, however, have resisted recessionary forces better than others because their domestic markets play a more important role in keeping the demand from falling sharply.