Indian economy to grow by 5.4% in 2009: IMF

The International Monetary Fund today retained its projection for Indian economic growth at 5.4 per cent in 2009, implying a slower growth in the second half of this calendar year.      

In its twice-yearly World Economic Outlook released in Istanbul, the Fund lowered the projection for the next year by 0.1 per cent to 6.4 per cent.      

The Indian economy grew by 5.8 per cent in the first quarter and 6.1 per cent in the second quarter of this calendar year.     

Finance Minister Pranab Mukherjee and Planning Commission Deputy Chairman have expressed doubts whether the economy will grow at the rate of 6.1 per cent in the third and fourth quarters of 2009 due to weak monsoon.     

The economy grew by 7.3 per cent in 2008 and 9.4 per cent in 2007. If the IMF projections prove correct, it would grow at the least rate in recent years due to the global financial crisis and drought.      

The Reserve Bank has projected the country's economic growth at 6 per cent in fiscal 2009-10, which comprises last three quarters of the current calendar year.      

The IMF and World Bank will hold two-day annual meeting in Istanbul from October 6.

The IMF said that after a deep recession, global economic growth has turned positive and is driven by wide-ranging, coordinated public intervention that has supported demand and reduced uncertainty and risk in financial markets.      

The global recovery, however, is expected to be slow, "as financial systems remain impaired and support from public policies will gradually have to be withdrawn."      

It added that in most countries, growth will be positive for the rest of the year as well as in 2010, but stressed that to sustain the recovery, private consumption and investment will have to be strengthened.       

The Fund said trade and currency imbalances need to be addressed to make sure the rebound is sustainable.