The International Monetary Fund (IMF) has projected India to grow at 6.5 per cent in 2016, overtaking China whose growth was forecast to slow down to 6.3 per cent.
In its World Economic Outlook report released on Tuesday, the IMF forecast that India would grow at 6.3 per cent in 2015, up from 5.8 per cent in 2014. China’s 2014 growth rate was 7.4 per cent.
In another forecast released on Tuesday, the United Nations World Economic Situation and Prospects (U.N. WESP) report predicted a smart recovery for India in 2015. It pegged its 2015 India growth forecast lower than the IMF’s — at 5.9 per cent. At 6.3 per cent, the UN WESP’s 2016 India growth forecast is, however, closer to that of the IMF.
The IMF said global growth would receive a boost from lower oil prices. But this boost was projected to be more than offset by negative factors such as investment weakness, as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies.
It cut its global growth projection for 2015 to 3.5 per cent and for 2016 to 3.7 per cent, to show a downward revision of 0.3 per cent relative to its October 2014 forecast. The revision reflects 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 World Economic Outlook. The U.S. is the only major economy whose 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 pick-up in industrial and investment activity after policy reforms by the Narendra 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 on infrastructure to take India on to a sustainable high growth path.