The International Monetary Fund today raised India's growth forecast for 2010 to 9.5 per cent, stating that favorable financing conditions and robust corporate profits will accelerate economic expansion.
The multilateral lender hiked its growth projection from the earlier estimate of 8.8 per cent it made in April.
"In India, growth is expected to accelerate to about 9.5 per cent in 2010, as robust corporate profits and favorable financing conditions fuel investment, and then to settle to 8.5 per cent in 2011," the IMF said in an update of its World Economic Outlook.
Recently, Prime Minister Manmohan Singh had said the country's economy is expected to grow by 8.5 per cent for the fiscal year ending March 31, 2011. In the last fiscal, the economy expanded 7.4 per cent.
According to the IMF, the world economy expanded at an annualized rate of over 5 per cent during the first quarter of 2010, mostly due to robust growth in Asia.
"World growth is projected at about 4.5 per cent in 2010 and 4.25 per cent in 2011," the report said.
The lender noted that Asia's strong recovery from the global financial crisis continued in the first half of 2010, despite renewed tension in global financial markets.
"GDP growth forecasts for Asia have been revised upward for 2010, from about 7 per cent in the April WEO (World Economic Outlook) to about 7.5 per cent," it added.
Meanwhile, the IMF warned that despite the stronger than expected first half recovery, uncertainties surrounding sovereign risks could hamper the economic outlook.
IMF Chief Economist Olivier Blanchard pointed out that downside risks have risen sharply.
"While we remain cautiously optimistic about the pace of recovery, there are clearly dangers ahead... Outcome will be decided based on how Europe deals with fiscal problems, how advanced countries proceed with fiscal consolidation and how emerging market countries re-balance their economies," Blanchard said.
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