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India not immune to crisis: IMF

Source: PTI
October 08, 2008 19:55 IST
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India's economic growth rate may slip further and decline to 6.9 per cent in 2009, as countries in emerging Asia are not totally immune to the financial crisis in the US and its subsequent fallout, the International Monetary Fund (IMF) said on Wendesday.

India's Gross Domestic Product (GDP) is likely to slowdown to 7.9 per cent in 2008 and slide further to 6.9 per cent in the next year, said the IMF's World Economic Outlook (WEO) released here ahead of the annual meetings of the IMF and the World Bank.

According to the IMF data, India recorded a GDP growth of 9.8 per cent in 2006 and 9.3 per cent in 2007.

"In India, growth in the second quarter came down to about 8 per cent, on the back of weakening investment," the report said, adding private consumption and export, however, continued to do well.

For Asia as a whole, the report said, economic growth rate was likely to slip to 7.7 per cent in 2008 and 7.1 per cent the next year in 2009.

The report further said that financial markets have weakened in recent months, driven by increasing concerns about the global outlook and declining investor risk appetite, particularly in the context of the September market turbulence.

Having experienced the largest run-up in prices in recent years during 2005-07, the report said, the stock markets, including in India, have declined.

In some countries, it added, borrowing spreads have risen markedly hurting those banks which rely heavily on funds from wholesale markets.

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