India to log 6.3% growth by 2016; will outpace global peers

India's economic growth is expected to improve to 6.3 per cent in 2016 with the country leading economic recovery in South Asia, according to a United Nations report.

The UN World Economic Situation and Prospects 2015 (WESP) report, launched on Wednesday, also said India is likely to make progress in implementing economic policy reforms and help provide support to business and consumer confidence.

It said global economic growth is forecast to continue increasing over the next two years, despite legacies from the financial crisis continuing to weigh on growth, and the emergence of new challenges, including geopolitical conflicts such as in Ukraine, and the Ebola outbreak in West Africa.

The global economy is expected to grow 3.1 per cent in 2015 and 3.3 per cent in 2016, compared with an estimated growth of 2.6 per cent for 2014, when the pace of expansion has been moderate and uneven. It said India, which is estimated to record a 5.4 per cent economic growth in 2014, will see GDP growth improving to 5.9 per cent next year and 6.3 per cent in 2016.

Economic growth in South Asia is also set to gradually pick up from an estimated 4.9 per cent in 2014 to 5.4 per cent in 2015 and 5.7 per cent in 2016.

"While the recovery will be led by India, which accounts for about 70 per cent of regional output, other economies such as Bangladesh and Iran are also projected to see stronger growth in the forecast period," the report said. The about six per cent growth projected for India in 2016 will be the highest since the 2008-2011 period when it had grown at about 7.3 per cent.

Economic growth had slowed to 4.7 per cent in 2012, according to the UN report.

During 2014, East Asia, including China, managed to register relatively robust growth, while India led South Asia to a moderate strengthening.

Developing countries as a group are expected to grow at 4.8 per cent in 2015 and 5.1 per cent in 2016, up from the 4.3 per cent estimated for 2014.

The report added that along with robust external demand, growth is expected to be underpinned by a moderate strengthening of domestic consumption and investment as countries benefit from improved macroeconomic conditions.

"Several countries, notably India, are likely to make progress in implementing economic policy reforms, thus providing support to business and consumer confidence," it said.