IMF raises India growth forecast to 9.4% in 2010-But warns of increase in downside risks globally

July 08, 2010: The International Monetary Fund (IMF) has raised its India growth forecast for 2010 to 9.4% from 8.8% estimated earlier.

In its July update of the World Economic Outlook (WEO) projections, the Washington-based multilateral agency, however, kept unchanged its 2011 India growth forecast at 8.4 per cent.

In a report released today, the IMF said that India's GDP growth is expected to accelerate to 9.4 per cent in 2010 as robust corporate profits and favourable financing conditions fuel investments.

The Government expects the country's economic growth to be over 8.5 per cent in 2010-11 (April-March). While IMF forecast is for the calendar year 2010, the Government makes its growth projection for fiscal year (April-March).

The IMF forecast said Asias strong recovery from the global financial crisis continued in the first half of 2010, despite renewed tension in global financial markets. The GDP growth forecast for Asia has been revised upwards to about 7.5 per cent from about 7 per cent in the April WEO.IMF expects the Chinese economy to grow by 10.5 per cent in 2010.

Balancing the strong growth numbers for the first half of 2010 and the adverse impact of increased financial turbulence, the IMF forecasts world growth to rise to 4 percent this year.Earlier it projected growth at 4 percent.

But despite the stronger than expected first half recovery, the IMF warned that uncertainties surrounding sovereign and financial sector risks in parts of the euro area could spread more widely, posing difficulties for both financial stability and the economic outlook.

At a global level, the IMF said policies should focus on implementing credible plans to lower fiscal deficits over the medium term while maintaining supportive monetary conditions, accelerating financial sector reform, and rebalancing global demand.

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