India, China to Continue Leading Asian Economic Growth: IMF.

The International Monetary Fund (IMF) has said that India and China would continue to lead theeconomic growth story of this continent.

"We expect growth to remain strong. We expect it to settle at a more sustainable rate of about 7 per centfor Asia as a whole, slightly down from 8 percent in 2010. We see China and India continuing to leadAsia's growth," IMF Head (Asia-Pacific) Anoop Singh said yesterday.

"Despite this positive outlook, there are still downside risks, but these mainly come from the externalenvironment: the risk that global growth could be weaker than we anticipate.

Also financial spillovers from advanced countries, especially in Europe, could be another source ofconcern, and constitute another downside risk," Singh said in interview to the IMF online survey.

However the threat of inflation prevails due to the strength of Asia's growth, he cautioned.

Moreover, he added that the risks posed by possibly weaker global economic growth and financialspillovers from advanced economies had to contend with by Asia and he expects an increase in theregion's economic importance.

"It is true that across Asia the region has been more dependent on exports than other emerging marketsin the world. And, therefore, in order to maintain these high growth rates, we do believe the region shouldreduce its reliance on export growth and we have emphasised the importance of rebalancing. That is, toraise domestic demand in Asia. This is also a major topic in our discussions with countries in Asia," Singhsaid.

On the other hand, IMF expects Indian economy to grow by 8.8 per cent during the current fiscal, up from7.4 per cent a year ago, mainly on the back of robust growth in farm sector and pick up in consumption.

The economy during the first half of the current fiscal rose by 8.9 per cent and, according to thegovernment estimates, may revert to the pre-global crisis level of 9 per cent growth.

However, the IMF has projected moderation in growth from the current high levels to 8.1 per cent nextfiscal.

Moreover, it said that India needs to speed up its return to pre-crisis monetary and fiscal policies in orderto deal with the high inflation figure.

It said the listing rising prices as a major area of concern and Country's Central bank, RBI could takemore monetary steps to contain inflationary expectations.

"We see room for further rate increase (by RBI) but at the same time it has to be done gradually andneeds to be looked at continuously," senior Resident Representative of the IMF Sanjaya Panth said.

Source : money.oneindia.in