IMF projects 7.9% growth rate for India in 2008 | World News - Hindustan Times
close_game
close_game

IMF projects 7.9% growth rate for India in 2008

PTI | By, Washington
Apr 09, 2008 11:20 PM IST

IMF attributed the moderation in the Indian economy during the second half of 2007 to slowdown in consumption in response to tight monetary policy of the Reserve Bank, although investment continued at a brisk pace.

In the backdrop of the global financial turmoil, IMF on Thursday projected that Indian economic growth rate would slip to 7.9 per cent in 2008 from 9.2 per cent in the previous year.

HT Image
HT Image

In 2009, the Indian economy will expand at slightly higher rate of 8 per cent, stated IMF's World Economic Outlook, released in Washington. The report further said weak export demand and higher financing costs will dampen the growth of private investment, the key driver of growth.

Hindustan Times - your fastest source for breaking news! Read now.

The impact of global financial turmoil following US sub-prime crisis, the cost of which is estimated at one trillion dollars by the IMF, will be less in case of emerging economies in the East as compared to developed nations.

Growth in consumer prices, which has been rising alarmingly in the recent past, in India is expected to moderate to 5.2 per cent in 2008 and four per cent in 2009. It was 6.4 per cent in 2007.

IMF growth projections for India are in line with other think tanks, including the Prime Minister's Economic Advisory Council that expected the economic growth rate to moderate to 8.5 per cent during 2008-09 against projections of 8.7 per cent for the previous fiscal.

IMF also projected slowdown in growth rate in emerging Asia to 7.5 per cent in 2008 from a high of 9.1 per cent in the previous year. In case of China, the GDP growth rate is expected to slip to 9.3 per cent from 11.4 per cent in 2007.

IMF attributed the moderation in the Indian economy during the second half of 2007 to slowdown in consumption in response to tight monetary policy of the Reserve Bank, although investment continued at a brisk pace.

However, in 2008 even private investment will take a hit on account of weak demand of goods from overseas buyers and rising interest costs.

On the positive side, IMF said monetary tightening has led to easing of inflation, which has again picked up in 2008 owing to rising commodity prices.

Inflation rate, as measured by wholesale price index, has shot up to three-year high of seven per cent during the week ended March 22.

The policy makers, the IMF said, would need to respond flexibly to "evolving developments, with some scope for monetary policy easing".

In light of uncertainties in the global market place, it said, "policy makers face a difficult task in balancing the trade offs between growth and inflation".

This assumes significance in case of India as RBI is to unveil annual credit policy on April 29 and will be required to balance the need for containing inflation and boosting growth.

In the case of countries like India, Pakistan and the Philippines, it suggested that efforts at fiscal consolidation should continue to remain an important priority.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away! - Login Now!

Get Latest World News along with Latest News from India at Hindustan Times.
SHARE THIS ARTICLE ON
Share this article
SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Friday, March 29, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On