India, China contribute to global growth: IMF

For the first time, fast-growing China and India are the principal contributors to global growth, with their economies recording an annual growth rate of more than nine per cent, a pace expected to moderate only slightly in 2008, says the International Monetary Fund.

The IMF, in its semi-annual global economic forecast, released in Washington on Wednesday, says that China is expected to grow by more than 11 per cent in 2007, while India is expected to expand by nine per cent.

It, however, says growth may moderate somewhat across emerging Asia in 2008, reflecting slower trade growth as well as some policy tightening in countries facing overheating pressures.

In emerging market and developing countries, growth is expected to remain strong across all regions; albeit at a somewhat more moderate pace than the brisk growth we have seen over the past two years.

The IMF says China is now the single-most important contributor to world growth, in terms of both market and purchasing-power-parity

exchange rates. Its economy continues to grow at breakneck speed, turning it into a driving force in the global economy.

China's economy gained further momentum in 2007, growing at 11.5 per cent, and is expected to grow by ten percent in 2008. Other emerging markets are also growing strongly. India continued to grow at more than nine per cent in 2007, and Russia grew by almost eight per cent.

In China and India, the IMF points out, growth may not slow as anticipated if recent monetary policy tightening proves insufficient to cool domestic demand growth. But the main downside risk is that continued turbulence in global financial markets could disrupt financial flows to emerging markets and trigger problems in domestic markets.

The IMF has, however, has marked down its semi-annual global economic forecast by nearly 0.5 per cent, mainly because of a slowdown in the United States. Global growth is expected to slow to 4.8 per cent in 2008, from the 5.2 per cent advance of this year.