India is now integrating more with the rest of Asia and will play a major role in the Asia's growth, top officials of the International Monetary Fund has said.
"You have a very rapidly growing large economy in the South Asia region, and that is India, and India is now also integrating much more with the rest of Asia," Kalpana Kochhar, IMF Deputy Director of the Asia Pacific Department told reporters late yesterday.
"For example, trade between China and India is growing rapidly. Of course, it is mostly imports from China-but it has grown very rapidly in recent years. So prospects for integration both in the South Asia region amongst themselves and with the rest of Asia I think have greatly improved and will continue to do so," she said.
IMF Director, Asia Pacific Department, Anoop Singh said that the fund expects Asia to continue leading the global recovery and grow by about 7 per cent this year and next year.
"As is now well-known, China and India will again lead Asia's growth with growth rates of 10 and 8.8 per cent this year," he said.
While the pattern of recovery has varied in Asia, as it has in other regions, Singh said it is important to note that both the more domestically oriented economies such as China, India and Indonesia as well as the more export-oriented economies are experiencing strong upturns.
Responding to a question, Singh said the IMF expects output gaps to close this year in a number of economies, including countries in South Asia such as India.
"Therefore, it is not surprising that inflation has begun to turn up. I recently presented an outlook that shows how expectations have moved up. There is a significant contribution to higher inflation coming from food and energy prices.
"There are reasons for that increase in food and energy prices, so we are not yet seeing an increase in underlying inflation at the same rate at which we are seeing a rise in overall inflation," he said.
He said that there is a clear commitment in many countries to ensure that inflationary expectations do not broaden to result in higher underlying inflation.
"So we are seeing monetary policy already being tightened in a number of countries. For example, India moved the second time just last week," Singh said.