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India recovered from its relative slump: IMF

Washington: India has recovered from its relative slump and its growth is expected to exceed five per cent again, a top IMF official said even as the global lender forecast the world growth to be

PTI [ Updated: October 08, 2014 9:20 IST ]
india recovered from its relative slump imf
india recovered from its relative slump imf

Washington: India has recovered from its relative slump and its growth is expected to exceed five per cent again, a top IMF official said even as the global lender forecast the world growth to be 3.3 per cent in 2014, down 0.1 per cent.

"Some countries have recovered or nearly recovered. But others are still struggling," the IMF's Chief Economist Olivier Jean Blanchard, said on the first day of the annual meeting of the financial body and the World Bank being held here in the US Capital.

"India has recovered from its relative slump, and, thanks in part to policy and a renewal of confidence, growth is expected to exceed five per cent again," Blanchard said adding that in emerging market economies, lower potential growth is the dominating factor.

For emerging market economies as a whole, potential growth is now forecast to be 1.5 per cent lower than it was in 2011.

The IMF forecast the world growth to be 3.3 per cent in 2014, down 0.1 per cent.

China is maintaining high growth, despite the end of a housing and a credit boom.

Looking forward, rebalancing is likely to imply slightly lower growth, but this must be seen as a healthy development.

Among advanced countries, the US and the UK in particular are leaving the financial crisis behind and achieving decent growth.

Even for them however, potential growth is lower than it was in the early 2000s, Blanchard said.

"Japan is growing, but high public debt inherited from the past, together with very low potential growth going forward, raise major macroeconomic and fiscal challenges. Growth in the euro area nearly stalled earlier this year, even in the core.

"While this reflects in part temporary factors, both legacies, primarily in the south, and low potential growth, nearly everywhere, are playing a role in slowing down the recovery," he said.

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