IMF projects India's GDP to pick up in 2015 to 6.4%

The IMF on Tuesday forecast 5.6 per cent growth rate for India this year and a higher 6.4 per cent in 2015, citing renewed confidence in the market due to a series of economic reforms being undertaken by the new Government.

"Growth in India is expected to rise to 5.6 per cent in 2014 and pick up further to 6.4 per cent in 2015 as both exports and investment increase," the International Monetary Fund said in its latest World Economic Outlook report released on Tuesday.

In 2013, India's growth rate was five per cent. On the other hand in China, growth will remain at 7.4 per cent in 2014 and is projected to be of 7.1 per cent in 2015.

According to the WEO, after a slowdown in the first half of 2014, global growth is forecast to strengthen to 3.5 per cent in the second half of 2014 and 3.8 per cent in 2015.

But growth is uneven and still weak overall and remains susceptible to many downside risks. The IMF said global growth slowed more than expected from an annualised rate of 3.9 per cent in the second half of 2013 to 2.7 per cent in the first half of 2014.

"Although the downside surprise was mainly owing to temporary factors, particularly for the US economy, it also reflected a weaker recovery in the euro area, as the region continued to overcome the legacies of the crisis, and in Japan, where the negative effects on demand of the consumption tax increase were greater than previously expected," it said.

Among emerging market and developing economies, growth in China picked up in the second quarter, responding to the measures deployed to boost activity after a weaker-than-expected first-quarter out-turn.

However, domestic demand remained weak in a few major economies, notably in Latin America.

Geopolitical tensions related to the Russia-Ukraine situation and the Middle East dampened activity in those regions, but with limited broader spillovers so far, the report said.

Advanced economies, the report said, are expected to continue a slow recovery, with growth rising to 1.8 per cent this year and to 2.3 per cent in 2015.

Growth in emerging market and developing economies will slow to 4.4 per cent in 2014, before rising to 5.0 per cent in 2015, it said.

"The forecast is weaker than projected in the April 2014 WEO, reflecting the negative growth surprises in the first half of the year, a more subdued pace of domestic demand growth in some emerging," the report said.