The International Monetary Fund on Tuesday forecast India’s growth to strengthen from 7.2 per cent in 2014 to 7.5 per cent in both 2015 and 2016, overtaking China’s growth — for the first time since 1999 — that it projected will slow down to 6.8 per cent.
The World Bank too projected India’s growth to accelerate to 7.5 per cent in 2015, but added that on the back of significant acceleration of investment, growth could even reach 8 per cent in 2017-18. The country is attempting to shift from consumption to investment-led growth, at a time when China is undergoing the opposite transition, the Bank said in its bi-annual South Asia Economic Focus report.
'Growth paths of economies divergent this year'
Both the World Bank and the IMF’s projections for the current year are less optimistic than that of the Reserve Bank. The Central Bank-projected growth in 2015-16 (7.8 per cent) will be barely 30 bps faster than in 2014-15 (7.5 per cent) last week in its first bi-monthly monetary policy statement of 2015-16. At 8.1 per cent to 8.5 per cent, the Modi government’s growth projection for this year is the most optimistic.
Speaking to reporters after the release of the Outlook, IMF Chief Economist Olivier Blanchard said there was an increasing divergence in the growth paths of the world’s major economies this year, as a pick-up in the euro zone and India is expected to be offset by diminished prospects in other key emerging markets. Responding to a question, he said, he agreed with the general consensus that the U.S. Federal Reserve would raise interest rates later this year.
The Oulook projects global growth to reach 3.5 percent and 3.8 per cent in 2015 and 2016 from the ‘modest’ 3.4 per cent in 2014 — in line with the projections in the IMF’s January 2015 World Economic Outlook Update. It projected growth to be stronger in 2015 relative to 2014 in advanced economies, but weaker in emerging markets. Nevertheless, emerging markets and developing economies still account for more than 70 percent of global growth in 2015.