IMF predicts five percent growth

International Monitory Fund (IMF) is projecting over five percent growth for Sri Lanka this year. Senior Economist in the World Economic Studies Division Abdul Abiad, said they were projecting an acceleration in growth from 3.5 percent last year to 5.5 percent this year at the press briefing on the International Monetary Fund’s World Economic Outlook.

“There is currently an IMF program which we can’t comment on regarding the details, the key priority in Sri Lanka is basically to obtain a credible and sustainable reduction in the fiscal deficit going forward, he said.

In India, growth is projected to be 8.8 percent in 2010, and 8.4 percent in 2011, supported by rising private domestic demand Abiad said. Consumption will strengthen as the labour market improves, and investment is expected to be boosted by strong profitability, rising business confidence, and favourable financing conditions.

India is relatively more closed, and has relied on stimulus to support growth.

The main challenge will be to ensure durable fiscal consolidation, including by implementing fiscal and other structural reforms, Abiad said.

Relative to other countries in the Asian region, India has relatively high inflation, and the tightening of monetary policy currently under way is appropriate he said.

In Nepal, real GDP growth is expected to slow to three percent in 2009/10 from 4.7 percent in 2008/09 due to the poor monsoon and softer remittances. Growth is anticipated to strengthen again in 2010/11, and the current account is expected to improve.