'Indian economy to grow 6.6 percent in 2016'

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SME Times News Bureau | 08 Nov, 2014
Economy is expected to log 6.4 percent in 2015 and 6.6 percent in 2016, states the Organisation for Economic Cooperation and Development (OECD).

Growth in emerging economies will remain stronger. It will be slow in China, pick up in India and remain sluggish in Brazil and Russia, states the OECD Economic Outlook report released Thursday.

According to the report, global growth is projected to strengthen but will remain modest by past standards.

"There are important differences across countries: the US recovery looks more robust, but the euro area faces an increasing risk of stagnation, and Japan's escape from deflation is not yet assured," the report said.

According to the report, China's GDP growth rate will slow down in a controlled fashion to 7.3 percent in 2014, 7.1 percent in 2015 and to 6.9 percent in 2016 due to its rebalancing efforts to have a sustainable growth.

On the other hand, India's growth rate is expected to go up 5.4 percent in 2014, 6.4 percent in 2015 and 6.6 percent in 2016.

According to the OECD report, there are substantial downside risks to the outlook.

"Risks of financial instability remain high, while volatility may increase, notably for emerging markets, as monetary policy and economic activity differ across the major economies," the report states.

Debt levels are high by past standards and some emerging economies have significantly increased external financial exposure. Because the growth of potential output has slowed in major economies since the crisis, future trend growth may be weaker than anticipated.

Modest global growth and the slowdown in potential growth call for ambitious structural reforms to boost investment, trade and job creation, the report states.

According to the report global growth has been subdued, but is projected to accelerate from the second half of 2014 onward as improved financial conditions, continued monetary policy stimulus and a slower pace of fiscal consolidation facilitate stronger activity in advanced economies.

World GDP growth rates in 2015 and 2016 will nevertheless remain modest relative to the strong pre-crisis expansion and somewhat below the long-term average.

Emerging economies will continue to outpace the advanced economies but less than in past decades, the report states.

"In India, the pick-up in growth after the sharp slowdown in 2012 -13 will continue despite the tight monetary and fiscal stance. Investment will be the main growth engine, after several quarters of subdued growth," the report said.

According to the report, improved business sentiment resulting from reduced political uncertainty, deregulation, and the government commitment to cut red tape should boost growth.