The Hindu : Business : IMF raises India's growth forecast

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Friday, Sep 15, 2006
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IMF raises India's growth forecast

SINGAPORE: India's fast-growing economy should expand by 8.3 per cent this year instead of 7.3 per cent as earlier projected, the International Monetary Fund (IMF) said on Thursday.

Interest rates might have to be raised further to check inflation, the IMF said in its twice-yearly World Economic Outlook, predicting India and China would be twin engines driving the roaring economies of emerging Asia. In 2007, India's growth is forecast to slow to 7.3 per cent, still higher than the seven per cent projection made by the IMF in April, after the 8.5 per cent growth in 2005.

"On the upside, there is the possibility of even faster-than-projected growth in China ... and in India," the IMF said.

At the same time, higher inflation due to rising oil prices could pose a risk for India and monetary authorities there may need to raise interest rates further to check an increase in consumer prices.

"In India, inflation has picked up with rising oil prices and strong domestic demand," the IMF said, projecting inflation of 5.6 per cent this year and 5.3 per cent in 2007. — AFP

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