Growth in India is projected to 'slow down' to 5% in 2019-2020: World Bank

WASHINGTON: The world Bank He has projected a five percent growth rate for India in the 2019-2020 fiscal year, but said it is likely to recover at 5.8 percent in the following financial year.

The growth rate for Bangladesh is projected to remain above seven percent across the forecast horizon and, in Pakistan, it is expected to languish by three percent or less until 2020 as macroeconomic stabilization efforts weigh on economic activity, the bank said in its latest edition of Global Economic Prospects.

"In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to five per cent in fiscal year 2019/20, which ends March 31, and recover to 5.8 per cent the following fiscal year," the world Bank said on Wednesday.

Global economic growth is forecast to reach 2.5 percent in 2020 as investment and trade gradually recover from the significant weakness of last year, but downside risks persist, he said.

The growth of the US is forecast. UU. It will decrease to 1.8 percent this year, reflecting the negative impact of previous tariff increases and high uncertainty. The growth of the euro area is expected to decrease to one percent revised downwards in 2020 amid weak industrial activity, the bank said in the report.

"With the 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," world Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, said.

The steps to improve the business climate, the rule of law, debt management and productivity can help achieve sustained growth, Pazarbasioglu said.

In the report's India section, the world Bank said tighter credit conditions in the non-banking sector are contributing to a substantial weakening of the domestic demand in the country.

In India, activity was limited by insufficient credit availability, as well as moderate private consumption, the report said.

The bank said regional growth in South Asia It is expected to increase gradually, to six percent in 2022, under the assumption of a modest rebound in domestic demand.

Growth in India is expected to slow down to five percent in fiscal year 2019/20 amid persistent problems in the financial sector. The key risks to the outlook include a more acute deceleration than expected in major economies, a resurgence of geopolitical tensions in the region and a retreat in reforms to address the deteriorated balance sheets in the financial and corporate sectors, the report said.

In India, economic activity slowed substantially in 2019, with the most pronounced slowdown in the manufacturing and agricultural sectors, while government-related service subsectors received significant support from public spending, the bank said.

GDP growth slowed to five percent and 4.5 percent in the quarters of April-June and July-September 2019, respectively, the lowest readings since 2013, he said.

Sharp slowdowns in household consumption and investment onset, the rise in government spending. High-frequency data suggest that activity continued to be weak for the rest of 2019, the world Bank said.

The bank, in the report, praised India's efforts to gradually eliminate LPG subsidies. In India, as of 2012, the government reformed its subsidy regime for liquefied petroleum gas (LPG).

LPG subsidies to households encouraged the formation of black markets where subsidized LPG distributed to households was diverted to the commercial sector.

The government gradually increased the price of LPG for households while implementing a large-scale targeted cash transfer mechanism, the bank said.

The program successfully eliminated distortions in the LPG market, with limited negative consequences for the poor, and the tax savings obtained from the subsidy reduction completely offset the costs of the specific cash transfer, the report said.