WASHINGTON: The International Monetary Fund (IMF) has hailed Pakistani and Indian moves to expand bilateral trade, saying it will assist growth prospects.

Laura Papi, Assistant Director, IMF, told reporters “definitely it is a positive move,” but note that the move alone will not be enough to help India regain high-growth rate.

“It would definitely have some positive effects. But not sufficient by itself to bring India back to eight per cent,” she remarked, when questioned about the benefits of the increased trade.

She explained that some trade between India and Pakistan is probably at the moment intermediated by other countries.

“Of course to the extent that it becomes bilateral, the cost of trading will be reduced and will have a positive impact on growth, but it will not be all new trade. Overall definitely it is a positive move,” Papi said, when asked about the likely impact of increased bilateral trade on growth prospects.

Discussing the 2013 staff report on Indian economic scenario, she said the outlook is for subdued growth and a fairly modest recovery for this year still accompanied by quite high inflation and elevated current account deficit.

“The reason for this subdued outlook is that investment has slowed significantly and we see some supply-side issues such as supply bottlenecks as having played an important part in lower investment growth and because of this we have also revised down our medium-term growth projections.”

India's growth is projected at about five per cent for 2012-13, but should pick up to six per cent in 2013-14.