World Bank slashes growth forecast for India

World Bank slashes growth forecast for India

Question: What is the estimated growth rate of India in 2019 fiscal as per latest edition of the biannual South Asia Economic Focus report?
(a) 6.0
(b) 6.8
(c) 6.9
(d) 6.2
Answer: (a)
Related facts:

  • On 13 October 2019, World Bank has released its biannual report on South Asia economic scenario titled as South Asia Economic Focus, Fall 2019: Making (De)centralization Work.
  • The report warns South Asian countries to judiciously perform decentralization works as it can degenerate into fragmentation if not properly managed.
  • In its report,World Bank has estimated India’s growth rate to fall to 6 percent for year 2019 after a broad-based deceleration in the initial quarters of this fiscal.
  • However, the growth is then expected to gradually recover to 6.9 percent in fiscal year 2020/21 and to 7.2 percent in the following year.
  • In 2018-19, the growth rate of the country stood at 6.9 per cent.
  • In India, domestic demand has slipped, with private consumption growing 3.1 percent in the last quarter from 7.3 percent a year ago, while manufacturing growth plummeted to below 1 percent in the second quarter of 2019 compared to over 10 percent a year ago.

Regional scenario:

  • In line with a global downward trend, growth in South Asia is projected to slow to 5.9 percent in 2019, down 1.1 percentage points from April 2019 estimates.
  • In South Asia,Bangladesh witnessed the highest growth rate of 7.9 percent in 2018 and is estimated to be highest with 8.1 percent in 2019 fiscal.
  • The sharp economic slowdown in South Asia is due to the weakened domestic demand, declining industrial production and imports, as well as tensions in the financial markets.
  • The report notes that South Asia’s current economic slowdown echoes the decelerating growth and trade slumps of 2008 and 2012.
  • With that context, the report remains cautiously optimistic that a slight rebound in investment and private consumption could jumpstart Asia’s growth up to 6.3 percent in 2020, slightly above East Asia and the Pacific, and 6.7 percent in 2021.

Links:
https://www.worldbank.org/en/news/press-release/2019/10/13/growth-in-south-asia-slows-down-rebound-uncertain https://economictimes.indiatimes.com/news/economy/indicators/world-bank-slashes-india-growth-forecast-for-fy20-to-6-from-7-5/articleshow/71572801.cms

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