EIU ups GDP forecast to 8.8 per cent for FY 11

MUMBAI: Revising upward its earlier forecast on India's GDP for the current fiscal, the Economic Intelligence Unit ( EIU) today said the domestic economy is expected to clock an average 8.8 per cent growth in FY 11.

EIU, which is the research-arm of the London-based business publication, The Economist, had earlier pegged the GDP growth at 8.6 per cent.

"We forecast that the GDP growth will average 8.8 per cent in 2010-2011," EIU Head of Research (South Asia and Australasia) Manoj Vohra said in a statement.

The higher projections are based on the impressive performance of the domestic economy in the previous quarter (Q2), which clocked an 8.9 per cent growth, Vohra said, adding the momentum in economy is likely to continue in the current fiscal as well in FY 12 and FY 13 with GDP expected to grow by 8.6 and 8.8 per cent, respectively.

India's strong growth fundamentals---high savings and investment rates, fast labour force-growth, a stable operating environment and the rapidly expanding middle-class---will ensure a steady performance in the coming years, Vohra said.

"India's real GDP, on an expenditure basis, is forecast to grow by an average of 8.7 per cent a year between 2010-11 and 2015-16," he said.

On interest rates, the Economist Intelligence Unit forecasts that the repo rate will remain on hold for the remainder of 2010, before being raised slightly, to 6.5 per cent in 2011.