As Asia rebounds rapidly from the depth of the global crisis, India's growth is expected to accelerate to 6.5 per cent in 2010 from 5.33 percent in 2009 on the back of strong domestic demand, the International Monetary Fund (IMF) said.
"In particular, the normalisation of financial market conditions is expected to support a rebound of private investment, sustaining demand even as the fiscal stimulus wanes," it said in the latest Regional Economic Outlook (REO) for Asia and the Pacific, released in Seoul Thursday.
Noting that there will continue to be significant differences in growth patterns within the region, IMF forecast Asia's growth as a whole to accelerate to 5.75 per cent in 2010 from 2.75 percent in 2009, both higher than previously projected.
"The primary driver of Asia's recovery has been a progressive return towards normalcy following the abrupt collapse in global trade and finance at the end of 2008," the report said.
"Just as the US downturn triggered an outsized fall in Asia's GDP because international trade and finance froze, now their normalisation is generating an outsized Asian upturn."
This development confirms that Asia has not decoupled from the rest of the world, the REO noted.
Noting that global conditions are expected to continue to improve gradually in 2010, the report forecasts that output in the large G7 economies would grow by 1.25 per cent next year, recouping only half the contraction estimated for 2009, because private demand in these countries remains constrained by the legacy of the crisis.
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