India is projected to grow at a slightly lower pace than expected earlier at 7.2 per cent this fiscal but the country is an “exception” to the worsening picture in major emerging economies, says OECD.
Releasing its interim economic outlook report today, the Paris-based think tank said global growth prospects have weakened slightly and become less clear in recent months.
Even as OECD marginally lowered the growth forecast for India for the current and next financial years, it said the country is “expected to be the fastest-growing major economy over the coming two years”.
“India will grow by 7.2 per cent in 2015 and 7.3 per cent in 2016,” the Organisation for Economic Cooperation and Development (OECD) said.
The latest figures are slightly lower than the projection of 7.3 per cent (2015-16) and 7.4 per cent growth (2016-17), respectively, made by OECD in June this year.
India’s economic growth slowed to 7 per cent in the three months ended June compared to 7.5 per cent expansion recorded in the January-March quarter, as per official estimates.
“World trade growth has stagnated and financial conditions have deteriorated. The recovery is nonetheless progressing in advanced economies, but the outlook has worsened further for many emerging market economies (EMEs),” OECD added.
Emphasising that India is projected to continue to grow strongly, broadly in line with 2015, the think tank said EMEs like Brazil and Russia should see some improvement in 2016 if commodity prices do not fall further.
“The slowdown has been sharpest in countries heavily dependent on commodities and/or with close trade links to China, notably in East and South-East Asia. In 2014, over a third of all merchandise imports in China came from regional trading partners.
“The main exception to the worsening picture is India, where growth is supported by strong consumer spending and public investment in infrastructure,” the report noted.
In 2015, China is expected to grow by 6.7 per cent and at a slower rate of 6.5 per cent next year.
Brazil’s economy is expected to shrink by 2.8 per cent in 2015 and by an additional 0.7 per cent rate in 2016, it added.
“A key puzzle in the short-term outlook centres on China, where recorded growth has held up well, but some indicators point to a slower underlying pace of economic activity.
“The marked slowdown in Chinese import demand has important spillover effects on global growth, particularly in emerging economies with close trade links to China, and those that depend on commodities,” OECD said.
The global growth forecast has been trimmed to 3 per cent this year from earlier projection of 3.1 per cent. The rate of expansion next year is expected to be 3.6 per cent lower than June estimate of 3.8 per cent.