Chennai/Washington, 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, projects the report.
However the International Monetary Fund (IMF) in its World Economic Outlook update has projected a higher growth rate for India in 2015 and 2016.
According to IMF, India's growth rate is expected to be 6.3 percent in 2015 and 6.5 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 the 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," the report 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 sub-par 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, the UN report said.
Meanwhile IMF Tuesday projected the Asian economy to grow at 6.3 percent in 2015 and 6.5 percent in 2016.
"Slower growth in China will impact growth in much of emerging Asia except India where weaker external demand is offset by the boost to the terms of trade from lower oil prices and a pickup in industrial and investment activity after policy reforms," it said.
In emerging market and developing economies, growth is projected to remain broadly stable at 4.3 percent in 2015 and to increase to 4.7 percent in 2016 - a weaker pace than forecast in the October 2014 WEO.
IMF cited three main factors to explain the downshift: slower growth in China, a much weaker outlook in Russia and downward revisions to potential growth in commodity exports.
"At the country level, the cross currents make for a complicated picture," said Olivier Blanchard, IMF Economic Counsellor and Director of Research. It means good news for oil importers, bad news for oil exporters.
"Good news for commodity importers, bad news for exporters. Continuing struggles for the countries which show scars of the crisis, and not so for others. Good news for countries more linked to the euro and the yen, bad news for those more linked to the dollar."
Saying that global growth will receive a boost from lower oil prices, which reflect to an important extent higher supply, IMF projected global growth in 2015-16 at 3.5 and 3.7 percent, 0.3 percent less than projected in the October 2014 World Economic Outlook .
"But this boost is projected to be more than offset by negative factors, including investment weakness as adjustment to diminished expectations about medium-term growth continues in many advanced and emerging market economies," IMF said.
The revisions reflect a reassessment of prospects in China, Russia, the euro area, and Japan as well as weaker activity in some major oil exporters because of the sharp drop in oil prices, it said.
The US is the only major economy for which growth projections have been raised as growth rebounded ahead of expectations after the contraction in the first quarter of 2014, it said.
IMF projected growth in US to exceed three percent in 2015-16, with domestic demand supported by lower oil prices, more moderate fiscal adjustment, and continued support from an accommodative monetary policy stance, despite the projected gradual rise in interest rates.