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India to grow 7.7% as recovery picks pace: IMF
Published on 27 Jan. 2010 11:41 PM IST
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With the global recovery off to a stronger start, Indian economy is projected to grow at 7.7 percent in 2010, 1.3 percentage points higher than forecast earlier, the International Monetary Fund (IMF) said on Tuesday. India, that recorded a growth rate of 7.3 percent in 2008, dipping down to an estimated 5.9 percent in 2009, is projected to grow at a still marginally higher 7.8 percent in 2011, up 0.5 percentage points from last year’s forecast, the IMF said in an update of World Economic Outlook (WEO). Noting that the recovery is proceeding at different speeds in the various regions, IMF said world output is expected to rise by 4 percent in 2010, representing an upward revision of .75 percentage point from the October 2009 WEO. Following the deepest global downturn in recent history, economic growth solidified and broadened to advanced economies in the second half of 2009, it said. In most advanced economies, the recovery is expected to remain sluggish by past standards, whereas in many emerging and developing economies, activity is expected to be relatively vigorous, largely driven by buoyant internal demand, the WEO said. IMF suggested that policies need to foster a rebalancing of global demand, remaining supportive where recoveries are not yet well sustained. Real activity is rebounding, supported by extraordinary policy stimulus global production and trade bounced back in the second half of 2009, the WEO said noting, “confidence rebounded strongly on both the financial and real fronts, as extraordinary policy support forestalled another Great Depression.” Driving the global rebound was the extraordinary amount of policy stimulus. Monetary policy has been highly expansionary, with interest rates down to record lows in most advanced and in many emerging economies, while central bank balance sheets expanded to unprecedented levels in key advanced economies, the WEO said. Output in the advanced economies is now expected to expand by 2 percent in 2010, following a sharp decline in output in 2009. The new forecast reflects an upward revision of 0.75 percentage point. In 2011, growth is projected to edge up further to 2.5 percent. In spite of the revision, the recovery in advanced economies is still expected to be weak by historical standards, with real output remaining below its pre-crisis level until late 2011. Moreover, high unemployment rates and public debt, as well as not-fully-healed financial systems, and in some countries, weak household balance sheets are presenting further challenges to the recovery in these economies. Growth in emerging and developing economies is expected to rise to about 6 percent in 2010, following a modest 2 percent in 2009. The new projection reflects an upward revision of almost 1 percentage point. Worst is over, 2010 looks positive The outlook for the global economy has turned positive this year and the worst is over even though the road ahead is full of challenges, Wipro Chairman and a co-Chair of the World Economic Forum (WEF), Azim Premji said. “The last 12-18 months have been very difficult for the global economy. However, I think the worst is over, 2010 looks positive,” Premji said in his message to the global business and government leaders for the annual WEF meeting here. The road to recovery, however, would vary in different economies, he said. “While the mature economies are taking time, the emerging economies like India, Brazil and China have already started to show smart growth recovery.” Premji, who could be often seen in a bus ferrying delegates from their hotels to the Congress Centre, the venue of the meeting, said he is particularly positive about the information technology industry. “It (IT) is the basic tool for efficiency and improvement. Given the challenges, most companies are looking at IT.” In fact, several Indian IT firms have posted better-than-expected results for the third quarter ended December. This year’s WEF meeting, which has a theme of ‘rethink, redesign and rebuild the world’, comes after 18 months of economic crisis and a global demand for tackling climate change. “These two issues seem almost disparate but to me they are not. They form the basis of my agenda as co-chair. Both are global challenges and need co-ordinated, rapid and overwhelming, response from the global community,” Premji said. He said the combination of economic crisis and tackling greenhouse gases present an opportunity in terms of market at the bottom of the economic pyramid and green growth. However, the world needs to resolve issues like financing the green technologies and increasing purchasing power of the poor in the developing countries. The WEF meeting which has 2,500 influential people participating, would try and deliberate on these issues. “Look at the rate of melting of the Himalayan glaciers.

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