IMF Issues Favorable Growth Report in India
Jan. 22 – The International Monetary Fund has announced that it expects India will see a growth rate of 5.4 percent for 2014 and 6.4 percent for 2015. This is an increase over the 4.4 percent growth registered in 2013.
India has seen its growth rates steadily improve over the past few years. As recently as 2012, the growth rate was down at 3.2 percent.
The IMF has also predicted that, at market prices (basic prices plus taxes but less subsidies), India’s growth rate in 2013-14, will be 4.4 percent. This is an increase over its previous estimate of 3.8 percent made earlier in October of 2013.
The Indian government had previously criticized the IMF for being too pessimistic about the country’s economy. The increase over previous growth estimates in the IMF’s outlook for the future of India’s economy was seen as a vindication for the government.
The news of India’s brightening economic future was met with cautious optimism by investors.
In its most recent World Economic Outlook Update, the IMF explained that “growth in India picked up after a favorable monsoon season and a higher export growth and is expected to firm further on strong structural policies supporting investment.”
The IMF numbers represent a more conservative outlook than that previously voiced by the World Bank which predicted 2014 and 2015 growth rates of 6.2 and 7.1 percent respectively.
India’s recovery is expected to be buoyed by the strengthening recovery in the world’s advanced economies.
Olivier Blanchard, IMF chief economist stated that “The basic reason behind the stronger recovery is that the brakes to the recovery are progressively being loosened. The drag from fiscal consolidation is diminishing. The financial system is slowly healing. Uncertainty is decreasing.”
The IMF reported that “global growth is now projected to be slightly higher in 2014, at around 3.7 percent, rising to 3.9 percent in 2015.”
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