The World Bank has projected a five percent growth rate for India in the 2019-2020 fiscal, but said it was likely to recover to 5.8 percent in the following financial year.
The growth rate for Bangladesh has been projected to remain above seven percent through the forecast horizon and, in Pakistan, it is projected to languish at three percent or less through 2020 as macroeconomic stabilisation efforts weigh on economic activity, the bank said in its latest edition of the 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 percent in fiscal year 2019/20, which ends 31 March, and recover to 5.8 percent the following fiscal year," the World Bank said on Wednesday.
The global economic growth is forecast to edge up to 2.5 percent in 2020 as investment and trade gradually recover from last year's significant weakness, but downward risks persist, it said.
The US' growth is forecast to slow to 1.8 percent this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty. The Euro area's growth is projected to slip to a downwardly revised one per cent in 2020 amid weak industrial activity, the bank said in the report.
"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.
The bank said the regional growth in South Asia is expected to pick up gradually, to six per cent in 2022, on the assumption of a modest rebound in domestic demand.
"Growth in India is projected to decelerate to five percent in FY(financial year) 2019/20 amid enduring financial sector issues. Key risks to the outlook include a sharper-than-expected slowdown in major economies, a re-escalation of regional geopolitical tensions, and a setback in reforms to address impaired balance sheets in the financial and corporate sectors," the report said.
GDP growth decelerated to five percent and 4.5 percent in the April-June and July-September quarters of 2019, respectively, the lowest readings since 2013, it 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.
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