Mumbai: The United Nations Conference on Trade and Development (UNCTAD) has forecast the Indian economy to grow at 8.5 per cent during the current fiscal.

In the first quarter of FY 2007 the economy registered an actual growth rate of 9.3 per cent growth.

UNCTAD has projected the growth figure on the base of the quick official estimates of 9.2 per cent economic growth in 2006-07. Revised estimates by the Central Statistical Organisation (CSO) had put economic growth at 9.4 per cent for the last fiscal.

However, UNCTAD''s estimate is closer to the Reserve Bank''s projection of 8.5 per cent growth in 2007-08.

"These are just preliminary figures," Nagesh Kumar, director-general of research and information system for developing countries, said after releasing the UNCTAD Trade and Development Report, 2007.

The report projected the Chinese economy to grow at 10.5 per cent during the calendar year on the high base of 10.7 per cent in 2007.

The fastest growing regions of the world economy will be East and South Asia, mainly due to the strong performance of India and China, the report said.

Other countries in East, South and Southeast Asia have benefited from the dynamism of India and China through strong export performances, the UNCTAD report said.

High investment ratios in both the countries - over 40 per cent of GDP in China and close to 30 per cent in India - can only persist if large external shocks can be avoided and if economic policy is not forced to limit expansion to a greater extent than currently envisaged, the report said.

High economic growth in East and South Asia, along with other regions of the world, with a notable exception to the United States, is leading to vigorous world economic growth for the fifth year in a row, the report said.

In Germany and Japan, where the acceleration of growth had been stimulated mainly by rapidly rising net exports and a recovery in fixed investment, private domestic demand remains fragile despite rising employment and some success in reducing unemployment, the report said.

The main risks for continued global economic expansion comes from the failure to address the current global imbalances, the report added.

The outlook will be rather bleak, if the present slowdown in the US economy deepens, pushing it into a recession and if the main surplus countries, despite appreciation of their currencies, do not initiate much greater expansionary policies based on domestic demand.

The report projected the world economy to grow at 3.4 per cent during this calendar year, compared to four per cent in 2006.
also see : General reports on Economy