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.
{{/usCountry}}It said the growth prospects for Iran and Pakistan have also improved moderately, although for both countries significant uncertainties remain.
{{/usCountry}}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.