India’s growth rate expected to be near 7.5%: OECD

The Dollar Business Bureau

OECD’s Global Economic Outlook release says India’s growth rate is expected to hover near 7.4% this year and 7.5% next year. The outlook was launched during the OECD’s annual Ministerial Council Meeting and Forum in Paris on Wednesday.

India is likely to remain as one of the fast growing economies in the world. Its private consumption in urban areas has been buoyed by the projections of higher income source and declining inflation. But the demand in rural areas has come down for the past two years due to bad weather conditions, the outlook said.

The decline in merchandise imports, driven by subdued commodity prices and weak business investment, has contributed to keeping the current account deficit at about 1.5% of GDP. Exports have been weak but net foreign direct investment has rebounded and more than fully financed the current account deficit in 2015, OECD said in its detailed report on India.

According to the outlook, the GDP growth of the world is projected to be near 3% in 2016 and 3.3% in 2017 as many emerging economies continue to lose momentum. The Indian GDP growth is led by a robust investment which is expected to continue. This is mainly due to the reforms initiated to boost infrastructure spending and strong demand growth.

Angel Gurria, Secretary General of OECD said that the global economy is stuck in the trap of low growth. The world economy is projected to pick up modestly if the downside risks are avoided. Some of the global economic risks include Brexit (Britain exit from European Union) and financial disruptions in emerging economies and the risks related to exchange rates.

OECD Chief Economist Catherine L Mann said that the longer the global economy remains in this trap of low growth, the harder it will be for the policy makers to keep their fundamental promises.