India’s Economic Slowdown an Aberration: World Bank
“We think that the recent slowdown is an aberration which will fix in the coming months,” World Bank President said.
The recent slowdown in India's economic growth is an "aberration" mainly due to the temporary disruptions in preparation for the GST, the World Bank said on Thursday, pointing out that it will get corrected in the coming months.
World Bank President Jim Yong Kim also said that the Goods and Services Tax (GST) is going to have a hugely positive impact on the Indian economy.
"There's been a deceleration in the first quarter, but we think that's mostly due to temporary disruptions in preparation for the GST, which by the way is going to have a hugely positive impact on the economy," Kim told a group of reporters during a conference call ahead of the annual meeting of the International Monetary Fund and the World Bank.
Finance Minister Arun Jaitley would be leading the Indian delegation to the annual meeting next week.
Kim was responding to questions on slowdown in India's growth in the first quarter, which the Opposition and several economists have attributed to demonetisation and the GST.
India’s GDP grew 5.7 per cent on a year-on-year basis during the April-June period (Q1). During the previous quarter (January-March) the GDP had grown by 6.1 per cent. The GDP growth rate for the same quarter last year was 7.9 per cent.
Responding to questions, the World Bank president insisted that this slowdown is temporary.
"We think that the recent slowdown is an aberration which will correct in the coming months, and the GDP growth will stabilise during the year. We've been watching carefully, as Prime Minister (Narendra) Modi has really worked on improving the business environment, and so, we think all of those efforts will pay off as well," Kim said.
Kim said after years of disappointing growth, the global economy has begun to accelerate, and trade is picking up as well, but investment remains weak.
We are concerned that downside risks such as a rise in protectionism, policy uncertainty, or possible financial market turbulence could derail this fragile recovery
"Countries need to continue to advance their reform agenda, they need to invest in people. They need to build resilience against overlapping challenges, including the effects of climate change, natural disasters, as well as conflict, forced displacement, famine and disease."
(This story has been edited for length)
Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox.