The International Monetary Fund (IMF) has projected that the Indian economy would grow by 8.4% in 2011 as activity remains buoyant although inflation pressures are emerging. It said there are also signs of overheating in many emerging economies driven in part by strong capital inflows.
The IMF projected the world economy to grow by 4.5% in 2011 — up by 0.25 percentage points than the multi-lateral agency’s October forecast.
“The two-speed recovery continues. In advanced economies, activity has moderated less than expected, but growth remains subdued, unemployment is still high, and renewed stresses in the euro area periphery are contributing to downside risks,” the IMF said in its latest World Economic Outlook (WEO).
This reflects stronger-than-expected activity in the second half of 2010 as well as new policy initiatives in the US that will boost activity this year, it said.
While the Indian economy is expected to expand 8.4% this year, neighbouring China is projected to grow 9.6% during the same period.
In calendar 2012, India is projected to clock a growth of 8 %.
To ensure robust recovery, IMF said that countries should take steps to overcome financial troubles in euro area as well as initiate policies to redress fiscal imbalances.