India set to overtake China next year: IMF

Export containers being loaded onto a ship at Kochi Port The country’s exports continued to slide for the eleventh month in a row, in August, though the pace of decline slowed to settle just under 20 per cent. According to provisional figures compiled by the Directorate-General of Commercial Intelligence and Statistics and released by the Commerce Ministry, India’s exports declined 19.4 per cent in August, at $14.28 billion, against $17.72 billion in the same month in 2008. However, cumulatively, the exports were down 31 per cent at $64.12 billion during April-August 2009 against $93 billion in the corresponding previous period. Digital Picture By K_K_Mustafah.9/10/09

In its latest World Economic Outlook report released on Tuesday, the International Monetary Fund (IMF) projected that India will grow 6.5 per cent in 2016, overtaking China which, it projected, will slowdown to 6.3 per cent.

 

For 2015, the IMF forecast India will grow at 6.3 per cent, up from 5.8 per cent in 2014. China’s 2014 growth rate was 7.4 per cent.

 

In a separate forecast also released on Tuesday, the United Nations World Economic Situation and Prospects UN WESP report too predicted a smart recovery for India during 2015.It pegged its 2015 India growth forecast lower than the IMF’s –at  5.9 per cent. At 6.3 per cent, the UNWESP 2016 India growth forecast is, however, closer to that of the IMF.

 

The IMF said that global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply. But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies.

Global growth projection 

It cut its global growth projection for 2015 to 3.5 per cent and for 2016 to 3.7 percent, downward revisions of 0.3 per cent relative to its October 2014 forecast. The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices, it said in the Outlook. The US is the only major economy for which growth projections have been raised.

 

In India, the growth forecast is broadly unchanged as weaker external demand is offset by the boost from lower oil prices and a pickup in industrial and investment activity after policy reforms by the Modi Government, the IMF said.

 

“India could overtake China but it must be taken note of that China has grown at high growth rates of 9 per cent to 10 per cent over decades and it is a much larger economy and India will have to work to sustain high growth rates over a period of time to be an engine of global growth,” said Nagesh Kumar, Head of the United Nations Economic and Social Commission forAsia and the Pacific (UNESCAP), South and South-West Asia Office.

 

He said, there was no way other than the Centre to increase its public spending for infrastructure to crowding-in private sector investments to take India on to sustainable high-growth.