Home demand to cushion US recession impact: Escap

A recession in the US and a steeper depreciation of the dollar will not have much impact on India, a United Nation Economic and Social Commission for Asia and the Pacific (Escap) report has said.

On most other economics of the region, like Taiwan, South Korea and Singapore, the impact would be harsh, The Economic and Social Survey of Asia and the Pacific 2008 said.

"China will remain resilient as strong domestic demand should cushion the external shock. In emerging Asia, India will feel the least impact," it said.

Unlike other fast-growing East Asian countries, India's growth is fuelled largely by strong domestic demand and not overseas markets.

Thus, a recession in the US is unlikely to derail the high economic growth logged by the country in the last few years, according to the report.

The survey said the country's gross domestic product would grow between 8.5 per cent and 9.5 per cent over the medium term, after growing 8.7 per cent in 2007.

"India could achieve and sustain 10 per cent growth by further improving the business environment and by developing its physical infrastructure and human capital," it added.

It said the Indian economy was entering a new phase of high growth with a forecast of 9 per cent for 2008 buoyed by investments, savings and increasing productive capacity.

But sustainability of high economic growth with moderate inflation would depend critically on fiscal prudence and high investment levels, it added.