Washington: The IMF and the World Bank on Tuesday forecast an identical 5.6 per cent growth rate for India this year and a higher 6.4 per cent in 2015, citing renewed confidence in the market due to a series of economic reforms pursued by the new government.
"Growth in India is expected to rise to 5.6 per cent in 2014 and pick up further to 6.4 per cent in 2015 as both exports and investment increase," the International Monetary Fund said in its latest World Economic Outlook (WEO) report released here on Tuesday.
In 2013, India's growth rate was 5 per cent. On the other hand in China, growth will remain at 7.4 per cent in 2014 and is projected to be of 7.1 per cent in 2015.
According to the WEO, after a slowdown in the first half of 2014, global growth is forecast to strengthen to 3.5 per cent in the second half of 2014 and 3.8 per cent in 2015.
But growth is uneven and still weak overall and remains susceptible to many downside risks.
Earlier the World Bank said that Indian economy, which accounts for 80 per cent of South Asia's output, is set to grow by 6.4 per cent in 2015-16 as against 5.6 per cent in 2014-15.
With economic activity buoyed by expectations from the newly-elected government of Prime Minister Narendra Modi, India is benefiting from a "Modi dividend", the bank said in its twice-a-year South Asia Economic Focus report on Monday.
Over the next year or so economic growth should be supported by the recovering US economy that would provide a market for Indian merchandise and service exports, it said.
"The outlook over the next years for South Asia indicates broad economic stability and a pick-up in growth with potential risks concentrated on the fiscal and structural reform side," said Martin Rama, chief economist for South Asia at the World Bank.
"Future growth will increasingly depend on strong investment and export performance," he added.
Private investment is expected to pick up thanks to the government's business orientation, and declining oil prices should boost private sector competitiveness.
But economic reforms will be needed for India to achieve its full long-term growth potential, the report argued.
The report said the region's economy will expand by a real 6 per cent in 2015 and by 6.4 per cent in 2016 compared to 5.4 per cent this year, potentially making it the second fastest growing region in the world after East Asia and the Pacific.
