The World Economic Situation and Prospect report, in its mid-2016 update, said India is expected to achieve a 7.5 percent GDP growth in 2017 and the economic prospects of the South Asian region will be "contingent" on the growth trajectory of India and Iran.

"India's economy is slowly gaining momentum, with an expected GDP growth of 7.3 and 7.5 percent in 2016 and 2017, respectively. Despite some delays in domestic policy reforms and enduring fragilities in the banking system, investment demand is supported by the monetary easing cycle, rising FDI, and government efforts towards infrastructure investments and  public-private partnerships," the report, released here said.

China, which grew at about 6.9 percent in 2015, will continue to witness slowdown in growth, with its GDP projected to grow 6.4 percent in 2016 and 6.5 percent in 2017.

"A larger-than-expected slowdown in China would have widespread spillover effects through trade, financial and commodity markets, while a further deterioration of commodity prices could trigger debt crises in certain commodity- dependent economies," said the report, produced jointly by the UN Department of Economic and Social Affairs (UNDESA) and the UN Conference on Trade and Development (UNCTAD).

The growth estimates for India in the mid-year update are in line with projections made in January this year, when the 2016 World Economic Situation and Prospect report had said that India will be the world's fastest growing large economy at 7.3 percent in 2016, improving further to 7.5 percent in the following year.

India's economy, which accounts for over 70 percent of South Asia's GDP, had grown by about 7.2 percent in 2015.

The report added that despite the protracted instabilities and general weakness of the global economy, South Asia's economic outlook remains favourable, with most countries benefiting from low oil prices.

Regional GDP growth is expected to accelerate from 6.1 percent in 2015 to 6.6 this year and 6.8 percent in 2017, owing to robust private consumption, strengthening investment demand and gradual progress on domestic policy reforms.

Inflation in the South Asian region is projected to remain relatively tame, reflecting subdued commodity prices and lower pressures from supply-side bottlenecks.

"This has increased monetary policy space, with prospects for further easing in some economies, including India," it said.

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