IMF raises India's GDP growth forecast

The International Monetary Fund (IMF) raised its forecast for GDP growth in India to 9.5% from 8.8% in April but expects growth to decline slightly to 8.5% next year. "In India, growth is expected to accelerate to about 9.5% in 2010, as robust corporate profits and favourable financing conditions fuel investment, and then to settle to 8.5% in 2011," the IMF said in an update of its World Economic Outlook.



The IMF increased the growth forecast for the overall emerging markets to 6.8%, from 6.3% in April. China's economy will grow the fastest at 10.5%, while that of Brazil will expand by 7.1%, the fund said. Brazil’s forecast had the biggest revision higher in the report, from a 5.5% prediction in April, the IMF report showed. Mexico’s economy will grow by 4.5% this year, more than the 4.2% expansion seen in April, the IMF said.

Inflation in the emerging economies is expected to accelerate to 6.25% this year before slowing to 5% in 2011, the IMF said. Raising rates in countries with excessive external surpluses should be accompanied by a stronger exchange rate, the fund said. Countries should also be ready to a swift policy reversal if risks materialize, it said.