Chennai, Jan 20 (IANS): India is expected to lead the South Asian economic growth that is set to reach a four-year high of 5.4 percent in 2015, up from an estimated 4.9 percent in 2014, said a United Nations (UN) report.
The Indian economic growth rate is expected to be 5.9 percent in 2015 and 6.3 percent in 2016.
"South Asia's economic growth is set to reach a four-year high of 5.4 percent in 2015, up from an estimated 4.9 percent in 2014 and well above the 4.1 percent recorded in 2013. For 2016, a further acceleration to 5.7 percent is forecast," said the UN World Economic Situation and Prospects 2016 report.
"The recovery is expected to be led by a pickup in growth in India, which accounts for about 70 percent of regional output. Other economies, such as Bangladesh and Iran, are also projected to see stronger growth in the forecast period," the report said.
According to the report, along with robust external demand, growth is expected to be underpinned by a moderate strengthening of domestic consumption and investment as several countries benefit from improved macroeconomic conditions.
The growth projections for 2015 and 2016 rest on several key assumptions, including normal monsoon conditions, stable or slightly moderating global food and energy prices, a limited impact of higher international interest rates on regional credit conditions and continued policy reforms, it said.
According to the report, India's economy expanded by an estimated 5.4 percent in 2014, an improvement from growth of 5.0 percent recorded in 2013, but still significantly below the 8.0 percent pace of the pre-crisis period.
"The recovery is partly the result of improved market sentiment after the new administration took office in the second quarter of 2014 and announced plans to reform the bureaucracy, labour laws and public subsidies," it said.
The authorities implemented reforms to ease restrictions on foreign direct investment, speed up investment in large-scale projects and lift state control on diesel prices.
After years of sluggishness, fixed investment has started to gain strength. This has also been reflected in a mild recovery in the manufacturing and construction sectors.
A subpar monsoon, along with fiscal constraints, has, however, weighed on economic activity.
Going forward, India is projected to see a gradual acceleration in growth, with gross domestic product forecast to expand by 5.9 percent in 2015 and 6.3 percent in 2016.