NEW DELHI: During the first quarter of the 2002-03 fiscal from April to June, India's economy witnessed a six percent growth, compared to 3.5 percent in the previous period. The main growth drivers were agriculture and manufacturing. "The upturn in the GDP growth pace for India will reverse as the drought will compress agricultural output and business confidence continues to be eroded by renewed tensions in the region," said Project LINK, a cooperative, international research activity jointly coordinated by the U.N.'s Department of Economic and Social Affairs (DESA) and the University of Toronto. India is expecting a drop of around 15 percent in agriculture output due to delayed rains and inadequate monsoon during June-September, it said. Unlike India, a rebound in several Asian developing economies is expected to continue with China's growth likely to exceed seven percent this year as also the next, the economists said. Regional tensions will hinder global economic recovery, they said. The growth rate of gross world product is forecast to be only 1.7 percent in 2002 and less than 3.0 percent in 2003, said The Global Economic Outlook, based on submissions presented at a meeting in Bologna. "The arrival of the peak of world economic recovery is not expected until mid-2003," it said. "The recovery process is also subject to additional uncertainties." Chief among the factors cited are impact of heightening geopolitical tensions in the Middle East and the decline in equity prices in the U.S., which "is of historic dimensions in duration and severity." The report forecast GDP to decline by 0.9 percent in Latin America this year. On South Asia the economists said: "Growth improved notably in the first half of 2002 and may continue to do so in some economies, but a few large economies in the region may experience moderation of growth in the second half. "The aggregate pace of GDP growth for the region in 2002 is estimated to remain nearly identical to that of 2001 at 4.5 percent and to improve in 2003 to 5.5 percent." The near-term outlook for the region has deteriorated somewhat since mid-2002 due to unfavourable monsoon, weakening external demand, heightened geopolitical uncertainties, and rising oil prices, the report said. The economists felt growth in Nepal may decelerate due to adverse weather and domestic insurgency. Improved prospects are seen for countries like Bangladesh, Pakistan and Sri Lanka, the report said. "While macroeconomic policies in the region are expected to remain broadly supportive, the region as a whole continues to encounter downside risks, including weather, external demand, and regional and domestic conflicts." In the short run, the economists felt a "strong import demand from the U.S., thus a further widening of the country's trade and current-account deficits, remains desirable" for a global recovery. "The longer the external deficits of the U.S. continue, the greater the risk of an abrupt correction and a shock to the world economy," the report said. While monetary and fiscal-policy stimuli, resilient consumer spending and inventory restocking continue to support the recovery, tepid business capital spending and increasingly lower equity prices continue to drag down global economic growth, it said. "Rising geopolitical tensions have contributed to higher energy prices - the price of oil has risen by more than 50 percent from January 2002 to the end of September."
Source: IANS