UNITED NATIONS: The Indian economy will grow 5 percent in 2014 and record a slightly higher expansion of 5.5 percent next year on stronger consumption and investment, a UN report said.
It said average economic growth in South Asia is projected to pick up gradually in the forecast period, after remaining near a two-decade low in 2013.
GDP is estimated to expand by 4.6 percent in 2014 and 5.1 percent in 2015, up from 3.9 percent in 2013.
"The moderate recovery is expected to be underpinned by stronger consumption and investment in the context of enhanced macroeconomic stability.
"Several of the region's economies, including India, have seen lower inflation, stronger external balances and more stable currencies in recent quarters, conditions that are expected to support business and consumer confidence," the report launched here today said.
It added that external demand is also projected to improve in 2014-15 as economic activity in developed economies gains momentum but the strength of the recovery in South Asia would be restricted by structural impediments, including energy and transport constraints, political unrest and violence, and a lack of economic policy reforms.The World Bank has projected an economic growth rate of 5.7 percent in fiscal year 2014 for India, while IMF has pegged the growth forecast at 5.4 percent in 2014 for the country.
The economic growth rate for financial year ending March, 2014, is projected to be 4.9 percent, marginally higher than 4.5 percent in the previous fiscal, by the Central Statistics Office.
The UN report said that global economy is expected to strengthen over the next two years, despite a downgrade of growth prospects for some developing economies and economies in transition.
Growth of world gross product (WGP) is projected at 2.8 percent in 2014 and 3.2 percent in 2015, up from 2.2 percent in 2013.
However, this pace of expansion is still low compared to the growth path before the 2008 global financial crisis.
The report warns that risks and uncertainties for the world economy include international spill-overs from ongoing adjustment in monetary policies by developed economies, vulnerabilities of emerging economies, remaining fragilities in the euro area, long-term unsustainable public finance for many developed countries and geopolitical tensions.
"More than five years after the financial crisis, the world continues to struggle with getting the global economic engine back to running at full capacity," Chief of the Global Economic Monitoring Unit for the UN Department of Economic and Social Affairs Pingfan Hong said. "Compared to pre-crisis trends, we have not sufficiently boosted output, trade and employment to their potential levels," Hong said.
Global average inflation is projected to increase mildly from 2.4 percent in 2013 to 2.7 percent in 2014, the third-lowest level since 2000.
While inflation for Africa and Western Asia will decline slightly, a more pronounced decrease is forecast for South Asia, mainly due to falling inflation in India and Iran.
Some countries that were among the hardest hit last year, such as India and Indonesia, escaped the turmoil in early 2014, following the improvement in key macroeconomic indicators.
The report said developing countries as a group are projected to grow at 4.7 percent and 5.1 percent for 2014 and 2015 and would keep contributing to a large proportion of global growth.
Growth in developed economies is projected at two percent in 2014 and 2.4 percent in 2015.
"For the first time since 2011, the developed economies of North America, Europe and Asia are all aligned towards positive economic growth over the next two years, which should form a positive cycle to reinforce further recovery," the report said.