India’s economic growth is projected to surpass that of China’s, with the GDP expected to zoom by 7.7% in 2016, according to a UN report.
The mid-year update of the UN World Economic Situation and Prospects (WESP) said India’s economy is projected to grow by 7.6% this year and 7.7% in 2016, overtaking China.
China is projected to grow by 7% in 2015 and 6.8% next year.
The report termed South Asia’s economic outlook as “largely favourable” since most economies are expected to experience a strengthening of growth in 2015-16. This expected to happen on the back of stronger domestic consumption and investment, and a pick-up in exports.
The region’s GDP is projected to grow by 6.7% in 2015 and 6.9% in 2016, up from an estimated 6.3% in 2014 – a significant revision of the previous forecast.
“This revision mostly reflects a higher growth trajectory in India,” it said.
Across South Asia, the expansion is expected to be driven by buoyant household consumption and a gradual recovery in investment.
Private sector demand will be underpinned by a more benign macroeconomic environment, including considerably lower inflation.
In 2015, global consumer price inflation is expected to average 2.5%, the lowest level since 2009.
Average inflation in the region is also projected to fall to its lowest level in almost a decade, following the recent decline in oil and food prices.
As a result, monetary policy has become more expansionary in several countries, notably in India and Pakistan, it said.
(With inputs from PTI)