WASHINGTON: The World Economic Outlook, a report containing a review of recent global developments, forecasts and risks which the IMF made public here Wednesday, makes the recommendations on the basis of continued strengthening of India's external position. The document, released in advance of the IMF-World Bank annual spring meeting beginning here later this week, says economic growth in India strengthened last year despite a severe drought that has adversely affected agricultural output. It notes that inflation had risen in recent years but hastens to add that it remains modest. The IMF, however, says the large general government fiscal deficit that has reached 10 percent of the gross domestic product (GDP) calls for establishing a "credible fiscal consolidation strategy". It says New Delhi has taken some "welcome steps" to further open the economy to foreign direct investment and move toward market-based pricing of petroleum products. But, the IMF says, more progress is needed in pushing through other "key reforms", including early passage of the proposed fiscal responsibility legislation. Further action is also needed to strengthen the financial sector, it says. The situation in Pakistan, the report says, has continued to improve with the GDP growth accelerating, inflation remaining subdued and the balance of payments strengthening. Efforts, however, needed to lower the fiscal deficit to reduce vulnerabilities. For Bangladesh, the IMF favours a comprehensive strategy for strengthening state-owned banks and to sustain the recent improvement in growth and the external position. The IMF says GDP growth prospects in emerging markets for 2003 have fallen moderately, reflecting in part the weaker economic outlook in industrial countries. However, growth in emerging Asia exceeded expectations in 2002, particularly in China, and is expected to remain solid this year. In industrial countries, it says, the United States is expected to continue to lead economic recovery although GDP growth is projected somewhat lower than that in 2002. For this year, as a whole, the IMF has projected global growth at 3.2 percent, 0.02 percentage points higher than 2002.
Source: IANS