India's economic growth is projected to surpass that of China's in 2016 with the GDP expected to zoom by 7.7%, according to a UN report which said India will help accelerate growth in South Asia.
The mid-year update of the UN World Economic Situation and Prospects (WESP), released on Tuesday, said India's economy is projected to grow by 7.6% this year and 7.7% in 2016, overtaking China.
China is projected to grow by 7% in 2015 and 6.8% next year.
The report termed South Asia's economic outlook as "largely favourable" since most economies are expected to experience a strengthening of growth in 2015-16 on the back of stronger domestic consumption and investment, and a pick-up in exports.
The region's GDP is projected to grow by 6.7% in 2015 and 6.9% in 2016, up from an estimated 6.3% in 2014--a significant revision of the previous forecast.
"This revision mostly reflects a higher growth trajectory in India," it said.
It said the growth prospects for Iran and Pakistan have also improved moderately, although for both countries significant uncertainties remain.
Across South Asia, the expansion is expected to be driven by buoyant household consumption and a gradual recovery in investment.
Private sector demand will be underpinned by a more benign macroeconomic environment, including considerably lower inflation.
In 2015, global consumer price inflation is expected to average 2.5%, the lowest level since 2009.
With oil prices expected to recover slowly and global activity projected to pick up, average inflation is forecast to accelerate to 3% in 2016.
Average inflation in the region is also projected to fall to its lowest level in almost a decade, following the recent decline in oil and food prices.
As a result, monetary policy has become more expansionary in several countries, notably in India and Pakistan, it said.
However, despite the improved outlook, South Asia's economies face, to varying degrees, long-standing development challenges including energy shortages, infrastructure deficits and political and social unrest.
The global economy will continue to grow at a modest pace.