Indian economy to slow to 5.5%: Geithner

After averaging at 8.8 per cent growth over the past four years, India's growth rate in 2009-10 is expected to slow down to 5.5 per cent mainly due to lower investment and declining external demand, the US Treasury Secretary Timothy Geithner has said.

"(India's) growth is expected to slow to around 5.5 per cent in FY 2009/10 (April-March) due to credit conditions and weaker external demand," Geithner said in the India section of his semi-annual report on International Economic Exchange Rate Policies.

The recently-announced policy measures to stimulate the economy and ease credit conditions should help cushion the downturn, he hoped.

Growth is slowing largely due to lower investment (reflecting tighter financing conditions and uncertainty) as well as declining external demand, although India is less export dependent than many Asian economies.

It said year-over-year growth slowed to 5.3 per cent during the fourth quarter of 2008, compared with 8.9 per cent in the same quarter in 2007; but on a seasonally-adjusted annualised basis, the economy contracted 2.9 per cent in the fourth quarter, the first contraction since early 2004.