Washington: The International Monetary Fund (IMF) on Thursday described India as a key engine of global growth after the country’s economy expanded 7.8 per cent in the second quarter, exceeding its expectations and the consensus among other observers.
The stronger-than-expected performance was driven by services and exports, even as the economy faced an energy price shock, said Julie Kozak, Director of the IMF’s Communications Department.
“India’s real GDP in the second quarter grew by 7.8 per cent,” Kozak said at an IMF press briefing. “That was above our staff expectations and also the consensus among other observers.”
“This upward surprise was driven by stronger than expected activity in the services sector and also in exports,” she said.
The IMF official said the result highlighted the economy’s ability to withstand external pressure. “The outturn also underscores the resilience of the Indian economy, despite the energy price shock,” she said.
“It also means that, as we’ve been saying for quite some time, that India does remain a key growth engine for the world,” she added.
Her comments came in response to questions on India’s latest growth figures, its macroeconomic data, and the effect of higher crude oil prices on a major energy importer.
Kozak said India’s latest GDP release incorporated a new index of industrial production and a new producer price index series. The changes, she said, should improve the country’s GDP estimates.
“We welcome these important steps that India is taking to modernise its macroeconomic statistics,” she said. “And we, of course, encourage the authorities to continue to further strengthen the statistical framework and data quality.”
The IMF said it was also monitoring the effect of rising oil prices on India’s economy. Kozak noted that costlier energy creates pressure for all oil-importing countries.
“When energy prices or oil prices increase, that puts pressure on the balance of payments of energy importers,” she said. “It also can put pressure on their fiscal positions, and that depends very much on the composition of their fiscal.”
She said many oil-importing countries had taken measures to limit the impact of such a shock. In India’s case, she said, the increase in energy prices had come at a time when the country was in a stronger economic position.
“Some countries like India have — the shock has occurred at a time when the country has been in a stronger economic position, and that is the case for India,” Kozak said.
The Fund will announce its new forecasts for India with its October World Economic Outlook, she said. Until then, Kozak said, the IMF’s assessment was that India had shown “quite a lot of resilience to the energy price shock”.
The briefing also announced that IMF Deputy Managing Director Nigel Clark was in India this week for meetings with key policymakers and private-sector representatives in New Delhi, Mumbai, and Chennai.
India is among the world’s largest crude oil importers, making international oil prices an important factor for its import bill, current account and public finances. The country imports a substantial share of the oil it consumes.
(IANS)
