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Indian economy to provide impetus to world GDP growth :IMF

According to the International Monetary Fund's (IMF) latest World Economic Outlook, higher growth in India may contribute to stronger growth and revival of the global economy during the current downslide. Compared to its forecast of the world gross domestic product (GDP) growth to 3 per cent in 2009, India is expected to grow at 6.9 per cent.

Further, the IMF report has now forecast a global GDP growth rate of 4.21 per cent for 2010, as against its earlier forecast of 4.76 per cent.

The report says the current crisis is "the most dangerous shock in mature financial markets since the 1930s". Earlier in 2001, after the technology bubble burst, the global economy registered growth of a low 2.2 per cent. During the early 1990s recession period, global GDP grew at 1.45 per cent in 1991, while it averaged 2 per cent in 1992-93, before rising back to 3.37 per cent.

However, in contrast, in the 2001 recession, China grew at 8.3 per cent and India 3.8 per cent. In 1991, 1992 and 1993, India grew at the much steady pace of 2.1 per cent, 4.3 per cent and 4.9 per cent, respectively. And now, China and India are expected to grow at 9.2 per cent and 6.9 per cent, respectively. Hence, the higher estimates of Chinese and Indian growth during the current downslide are expected to buffer the global economy.

IMF had predicted in April that growth would bounce back to the 2007 level of 4.9 per cent by 2011. For India, GDP growth is projected at 6.9 per cent in 2009 and 7.7 per cent in 2010, which is further likely to rise to 7.9 per cent by the next year. However, the IMF report also warned that one factor - the rate of inflation – if higher, could lower the central banks' ability to stimulate growth by cutting rates.

Source: IBEF

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