World Bank retains India’s FY19 growth forecast at 7.3%

The World Bank has maintained its growth forecast for India at 7.3 per cent for the current fiscal year and 7.5 per cent for FY20.

This projection suggests India will continue to be the world’s fastest growing major economy despite moderating activity and heightened risks clouding its economic prospects.

“Private consumption is projected to remain robust and investment growth is expected to continue as the benefits of recent policy reforms begin to materialise and credit rebounds,” the bank said in its report on the global economy, ‘Global Economic Prospects’, released on Wednesday.

The report has lowered its global growth forecast to 2.9 per cent from 3 per cent. It said China’s economic growth is projected to slow down to 6.2 per cent in 2019 and 2020 and 6 per cent in 2021.

China vs India

In 2018, the Chinese economy is estimated to have grown 6.5 per cent against India’s 7.3 per cent. In 2017, it had been marginally ahead at 6.9 per cent, against India’s 6.7 per cent, because of the slowdown in the Indian economy due to demonetisation and the GST rollout. The World Bank’s growth projection for India is a notch lower than the RBI’s 7.4 per cent but slightly higher than the Central Statistics Office’s 7.2 per cent.

The projection of several independent agencies and economists range between 7 and 7.4 per cent. However, all of them agree that demonetisation and GST had some short-term impact and that the economy has now recovered.

The World Bank report further said strong domestic demand is seen to widen the current account deficit to 2.6 per cent of GDP next year. Inflation is projected to rise somewhat above the midpoint of the RBI’s target range of 2 to 6 per cent, mainly owing to energy and food prices.

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