|
Washington: Growth
in India is expected to be moderate but remain above trend, with
GDP growth projected at 8.25 percent in 2011 and 7.75 percent in
2012, the International Monetary Fund (IMF) forecast Monday.
Infrastructure will remain a key contributor to growth in India,
and corporate investment is expected to accelerate as capacity
constraints start to bind and funding conditions remain
supportive, it said in its April 2011 World Economic Outlook (WEO).
However, with continued rapid growth, inflation is expected to
continue increasing this year across much of developing Asia, it
said noting inflation pressure is most evident in India.
Despite some moderation, inflation has become more generalised in
India and is projected to remain high - averaging 7.50 percent
this year, the WEO said. In other parts of developing Asia,
inflation is lower but is on the rise.
The WEO said even though growth has moderated from cyclical highs
to more sustainable rates, Asia continues to outpace other
regions.
But signs of overheating are starting to materialise in a number
of economies, including India, it said while noting that continued
high growth has meant that some economies in the region are now
operating at or above potential.
Credit growth is accelerating in some economies like Hong Kong,
India, and Indonesia, while it remains high in China.
Most of the increase in headline inflation in recent months in
Asia has been due to a spike in food prices, but core inflation
has also been increasing in a number of economies, most notably
India, the WEO said.
Capital flows to some larger emerging market economies, including
India, Brazil, China, and Indonesia are all within the range of or
above pre-crisis levels.
In many of the major emerging market economies headline inflation
is now exceeding 6 percent, up from 5.75 percent in January 2010 -
excluding India, the increase in inflation rate amounts to 1.25
percentage points.
In India, the CPI for industrial workers suggests that inflation
fell from about 16 percent in January 2010 to less than 10 percent
in December 2010, helped by less food price inflation on account
of post-drought recovery in agricultural output.
Nonetheless, inflation has remained stubbornly high and well above
the central bank's stated objective, the WEO said.
India's output is about 7 percent higher than pre-crisis level,
the WEO said. India, Brazil, Colombia, Indonesia, and Turkey have
experienced a noticeable pickup in real credit growth, generally
close to or well into a 10 to 20 percent range.
In India, credit growth has just begun to increase again, after a
boom through much of 2007 was followed by a sharp slowdown during
2008-09.
Nonetheless, from a five-year perspective, per capita real credit
growth has been very buoyant, with much flowing into real estate
and large infrastructure projects, the WEO said.
Many emerging market economies will need to tighten policies to
lower the risk of a hard landing, the IMF said suggesting
economies like India and Brazil with high public debt should take
advantage of strong cyclical conditions to improve their public
balance sheets.
The upturn in headline inflation across many emerging and
developing economies has coincided with a pickup in commodity
prices since mid-2010. In particular, higher food prices have
contributed significantly to higher inflation.
This reflects the pass-through of world food prices, but also - in
some significant cases, including China and India - higher prices
in local food markets, such as for fresh fruit and vegetables, the
IMF said.
(Arun Kumar can
be contacted at arun.kumar@ians.in)
|
Comments
|
Quick links