Sharply revising upwards its forecast, Paris-based think tank OECD today projected 5.7 percent growth for the Indian economy this year even as global recovery continues at a moderate pace.
Its latest estimate is way higher than the 4.9 percent growth projection in May this year. “Growth in India is projected to pick up and Brazil will experience a modest rebound from recession… India will grow by 5.7 percent in 2014 and 5.9 percent in 2015,” the Organisation for Economic Cooperation and Development (OECD) said.
Also read: Indian economy to grow at 5.6% in FY’15: FICCI
In its latest interim Economic Assessment report released today, OECD said a moderate expansion is under way in most major advanced and emerging economies. However, growth remains weak in the euro area, which runs the risk of prolonged stagnation if further steps are not taken to boost demand, it added.
OECD is a grouping of 34 countries. India’s economic growth accelerated to 5.7 percent in April-June quarter, much better than 4.7 percent in the same quarter of previous fiscal. Government expects growth in current fiscal to be between 5.4-5.9 percent. The economy grew by sub-5 percent in 2012-13 and 2013-14.
About India, OECD said the country “has the opportunity to achieve faster and more inclusive growth”. India needs to improve fiscal consolidation by shifting from subsidies to investment in social and physical infrastructure, control inflation and improve financial stability, it added.
Further, the grouping said the country should improve “infrastructure, simplify labour laws and pursue tax reforms”. According to OECD, even though emerging economies as a group would continue to grow much faster than the advanced economies, the forecast are uneven across countries.
While China is projected to see GDP growth of 7.4 percent this year, Brazil is anticipated to see an expansion of 0.3 percent. “While the global recovery continues at a moderate rate, the outlook is uneven across regions. Growth will be strong enough to push unemployment down further in US, UK and Canada.
“In Japan, where unemployment has already declined to low levels, the economy will grow broadly in line with its potential. China is expected to continue an orderly adjustment to still high but more sustainable growth rates,” OECD said.
The US is expected to see a growth of 2.1 percent this year while the UK is projected to grow 3.1 percent in 2014. “The euro area is projected to grow at a 0.8 percent rate in 2014… Growth prospects differ widely among the major euro area economies,” the grouping said.
OECD Deputy Secretary General and Acting Chief Economist Rintaro Tamaki said the global economy is expanding unevenly, and at only a moderate rate.