India to grow 7.5 percent in 2010 despite slow global recovery

By Arun Kumar, IANS,

Washington : India is expected to grow at 7.5 percent this year, powered by skilful macroeconomic management, even as the global economic recovery that is underway slows later this year as the impact of fiscal stimulus wanes, according to a new report from the World Bank.

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India’s GDP is projected to grow further at 8 percent in 2011 – compared to 6 percent in 2008 – says Global Economic Prospects (GEP) 2010, released Thursday even as it warns that while the worst of the financial crisis may be over, the global recovery is fragile. It predicts that the fallout from the crisis will change the landscape for finance and growth over the next 10 years.

Growth in the East Asia and Pacific region as well as in South Asia, particularly India, has been resilient, buoyed by a massive fiscal stimulus package in China and by India’s skilful macroeconomic management, the report noted.

Global GDP, which declined by 2.2 percent in 2009, is expected to grow 2.7 percent this year and 3.2 percent in 2011. Prospects for developing countries are for a relatively robust recovery, growing 5.2 percent this year and 5.8 percent in 2011 — up from 1.2 percent in 2009.

GDP in rich countries, which declined by 3.3 percent in 2009, is expected to increase much less quickly – by 1.8 and 2.3 percent in 2010 and 2011. World trade volumes, which fell by a staggering 14.4 percent in 2009, are projected to expand by 4.3 and 6.2 percent this year and in 2011.

Excluding China and India, the remaining developing countries are projected to grow at at 3.3 and 3.9 percent rate in 2010 and 2011, respectively, compared with 5.4 percent growth on average between 2003 and 2008, the GEP noted.

Combined, GDP growth in developing countries is projected to grow by some 5.2 percent in 2010, after a modest 1.2 percent rise in 2009 (2.2 percent if India and China are excluded), and by a relatively weak 5.8 percent in 2011.

Despite these relatively robust growth rates, the unusual depth of the recession will mean that spare capacity and unemployment will continue to plague economies in 2011 and some sectors may well still be shrinking.

Prospects for developing countries are for a relatively robust recovery in 2010, with growth of 5.2 percent in aggregate or 3.3 percent if China, India, and Europe and Central Asia are excluded, the WEP said.

(Arun Kumar can be contacted at [email protected])