India's booming but relatively closed economy could have a profound impact on the world economy at large if progress in boosting regional and global trade links continues apace, the International Monetary Fund (IMF) said on Wednesday. Revising up India’s 2005 growth forecast by half a percentage point to 7.1 per cent, IMF said an opening Indian economy with a young population and rapid growth rates could become a key engine of world growth over the next decade. ‘‘If India continues to embrace globalisation and reform, Indian imports could increasingly operate as a driver of global growth as it is one of a handful of economies forecast to have a growing working-age population over the next 10 years.’’ Some 75-110 million will enter India’s labour force over the next decade, the Fund said in its twice-yearly World Economic Outlook. And government efforts to boost international trade links will bear fruit, it added. India’s exports, although coming from a relatively low level, were forecast to more than double by 2010 while imports will nearly triple. IMF said imports were growing at about 33 per cent a year in 2003/2004, four times as fast as the 1990-2002 period. However, it stressed that such a boost to world demand will present major challenges for the global economy as well as obvious opportunities. ‘‘Faster growth, rising incomes and the accompanying urbanisation and industrialisation of India will, however, exert further pressure on an already tight global energy market,’’ it said. India is the world’s seventh-largest importer of crude oil and imports over 70 per cent of its oil needs. With vehicle ownership expected to quadruple by 2030, the country’s crude oil imports will only rise. The Fund said India’s economy remains relatively insular despite growing its share of world output to 5.8 per cent last year from 4.3 per cent in 1990. Over the past two years, India accounted for just under a fifth of Asian growth and 10 per cent of world growth, compared to 53 per cent and 28 per cent, respectively, for China. India still accounts for only 2.5 per cent of global trade compared to more than 10 per cent for China. IMF forecast India’s economy would slow in 2006 to 6.3 per cent growth. — Reuters
