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The World Bank on Wednesday lowered its growth estimate for India to 5 per cent for the current fiscal from the earlier projection of 6 per cent.
This is in line with the RBI’s and the government’s latest projection of 5 per cent growth rate for 2019-20. The multilateral agency has forecast global economic growth at 2.5 per cent in 2020.
“India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5 per cent in FY 2019-20, which ends March 31 and recover to 5.8 per cent the following fiscal year,” the World Bank said in its January report of ‘2020 Global Economic Prospects’.
Also read:Global growth poised for modest pick-up in 2020
It may be noted that the government’s Statistics Office on Tuesday released the first advance estimate and pegged real GDP growth at 5 per cent which is a 11-year low. Nominal growth rate is projected at 7.5 per cent, which is the lowest in nearly four decades.
About neighbouring countries, the World Bank said that Pakistan’s growth is expected to rise to 3 per cent in the next fiscal year after bottoming out at 2.4 per cent in FY20, which ends on June 30.
Bangladesh, a bright spot
In Bangladesh, growth is expected to ease to 7.2 per cent in 2019-20, which ends on June 30, and edge up to 7.3 per cent the following fiscal year.
Growth in Sri Lanka is forecast to rise to 3.3 per cent.
For South Asia, the World Bank said that growth in the region is expected to rise to 5.5 per cent in 2020, assuming a modest rebound in domestic demand and as economic activity benefits from policy accommodation in India and Sri Lanka and improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan
According to the World Bank, global economic growth is estimated to inch up to 2.5 per cent in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist.
Growth among advanced economies as a group is anticipated to slip to 1.4 per cent in 2020 in part due to continued softness in manufacturing.
Growth in emerging market and developing economies is expected to accelerate this year to 4.1 per cent. This rebound is not broad-based; instead, it assumes the improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.
“With growth in emerging and developing economies likely to remain slow, policymakers should seize the opportunity to undertake structural reforms that boost broad-based growth, which is essential to poverty reduction,” said Ceyla Pazarbasioglu, World Bank Group Vice-President for Equitable Growth, Finance and Institutions.
Ceyla Pazarbasioglu
Further, she said that steps to improve the business climate, the rule of law, debt management, and productivity can help achieve sustained growth.
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