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India will see a gradual growth acceleration with its GDP expected to reach 5.9 per cent this year and 6.3 per cent in 2016, the UN said on Monday while partly crediting the recovery to improved market sentiment after the new government took office and announced key reforms.
"India's economy expanded by an estimated 5.4 per cent in 2014, an improvement from growth of 5.0 per cent recorded in 2013, but still significantly below the 8.0 per cent pace of the pre-crisis period," said the United Nations World Economic Situation and Prospects 2015 (WESP) report, launched on Monday.
India is projected to see a gradual acceleration in growth, with GDP forecast expanding to 5.9 per cent in 2015 and 6.3 per cent in 2016, the report said. "The recovery is partly the result of improved market sentiment after the new administration took office in the second quarter of 2014 and announced plans to reform the bureaucracy, labour laws and public subsidies," it said.
The WESP report is produced at the beginning of each year by the UN Department of Economic and Social Affairs, the UN Conference on Trade and Development (UNCTAD), the five UN regional commissions and the World Tourism Organisation (UNWTO). Economic growth in South Asia is set to gradually pick up from an estimated 4.9 per cent in 2014 to 5.4 per cent in 2015 and 5.7 per cent in 2016, the report said.
"While the recovery will be led by India, which accounts for about 70 per cent of regional output, other economies such as Bangladesh and the Islamic Republic of Iran are also projected to see stronger growth in the forecast period," it said.
The global economy is expected to grow at 3.1 per cent in 2015 and 3.3 per cent in 2016, compared with an estimated growth of 2.6 per cent in 2014.
The world imports of goods and services is projected to grow by 4.7 per cent in 2015. The tepid growth of the world economy is a legacy of the global financial crisis of 2008 that continues to weigh on growth, while new challenges have emerged, including geopolitical conflicts such as in Ukraine and the Ebola epidemic, the report said.
"Among the developing countries, Asia will record the fastest growth which is based on domestic demand," said Alfredo Calcagno, the UNCTAD head of macro economic and development policies branch.
Despite a weak start in 2014, India's manufacturing sector registered employment gains in several sectors such as textiles, metals and information technology, which saw marked increases in employment levels through June 2014, the report said.