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World Bank sees India’s growth touching 6.7% in two years

Statesman News Service |

press trust of india
WASHINGTON, 13 JUNE: The World Bank today forecast a growth rate of 6.7 per cent for India within the next two fiscals with exports and private investment projected to strengthen and provide a boost to growth.
The country’s GDP in factor cost terms is projected to grow 5.7 per cent in the current fiscal (ending March 2014), and then accelerate to 6.5 per cent and 6.7 per cent, respectively, in the subsequent two financial years, it said.
In its latest ‘Global Economic Prospects’ report, the multilateral lending agency also said South Asia’s regional growth will be driven mainly by a projected pick-up in India.
Exports and private investment, which slowed sharply in 2012, are projected to strengthen during 2013-15 and provide a boost to growth. However, how robust that recovery will be, will depend on the pace of policy and fiscal reforms, and remains subject to significant uncertainty and downside risks.
Some upside risks to the outlook include a faster-than-projected pick-up in global demand and a larger than expected decline in commodity prices, the World Bank report said.
According to the report, a greater dependence on foreign investment inflows to finance India’s significantly larger current account deficit compared to the past has increased its vulnerability to a sudden reversal of investor sentiment.
“Several factors could result in a slowing or reversal of investment inflows ~ an unanticipated monetary tightening in some high income countries; resurgence of debt tensions; escalation of geopolitical conflict; and even disenchantment with the pace or nature of domestic reforms,” it said.
Moreover, the sharply relaxed monetary policy in Japan could result in strong and disruptive private capital flows, it added.

2.2 per cent global growth forecast
WASHINGTON, 13 JUNE: Although risks from advanced economies have eased and growth is firming, despite ongoing contraction in the Euro Area, the pick-up in developing countries will be modest because of capacity constraints in several middle-income countries, says the World Bank. In its latest Global Economic Prospects (GEP) report, the World Bank said the Global GDP is expected to expand to about 2.2 per cent this year and strengthen to three per cent and 3.3 per cent in 2014 and 2015 respectively.
Developing country GDP growth is now projected to be around 5.1 per cent in 2013, strengthening to 5.6 per cent and seven per cent in 2014 and 2015, respectively. pti