The January 2015 edition of Global Economic Prospects published by World Bank suggest India will be the fastest growing economy, will surpass china’s growth momentum as well.
As per the report, India’s GDP will grow by 7.1% by 2017, higher than china (6.9%) and rest of the world (3.2%). This change in out is primarily attributed by the change in government which escalated reforms and fixed policies paralysis in last few years.
Some key highlights from the reports on India’s (including South Asia) improved outlook;
- Economic activity in South Asia began to revive in 2014 as India, the largest economy in the region, emerged from two years of modest growth. Growth in the region is estimated to have accelerated to 5.5 percent in 2014 from 4.9 percent in 2013, the slowest in a decade
- With the reform agenda building momentum and current account vulnerabilities considerably diminished compared to 2013, currency and equity markets came under some pressure but were less affected than other emerging market peers during an episode of global financial volatility in December 2014. The improvement follows a sharp slowdown in the previous two years—to the weakest growth in nearly a quarter of a century—during which high inflation and a perception of policy paralysis had depressed domestic investment, while growing macroeconomic imbalances increased vulnerability to volatility in global financial markets
- Growth in South Asia rose to an estimated 5.5 percent in 2014 from a 10-year low of 4.9 percent in 2013. The upturn was driven by India, the region’s largest economy, which emerged from two years of modest growth. Regional growth is projected to rise to 6.8 percent by 2017, as reforms ease supply constraints in India
- In India, cumulative foreign portfolio investments crossed US$30 billion by the end of Q3 2014 (up from less than US$4 billion in 2013 and the highest since 2010), enabling the central bank to steadily rebuild reserves
- In India, a revised monetary policy framework, with an implicit objective of 6 percent inflation by 2016, is gaining credibility