On January 08, 2020, World Bank (WB),an international financial institution, in its report, “January 2020 Global Economic Prospects: Slow growth, policy challenges” ,has Slashed India’s GDP(Gross domestic product) growth for financial year –FY 2020 to 5% from 6% estimated earlier in October 2019.The bank cuts the forecast due to the weakness in credit distribution of non-banking financial companies (NBFCs) in India.
This is the slowest growth forecast since the 3.1% rate registered in FY 2008-09.Key Points:
i.However, the bank has expected that in the next FY- 21, India can improve its growth and this figure can reach 5.8 %.
ii.Global growth: It also slightly cuts the global growth by 0.2 % points to 2.4% for 2019 & 2.5% for 2020 due to a slower-than-expected recovery in trade and investment despite cooler trade war between the United States (US) and China.
Other nations- Growth in the United States, the euro area and Japan is projected to slightly decrease by 0.1 % points for both the years to 1.4% in 2020 from 1.6% in 2019 due to continued softness in manufacturing and reduction in effects of U.S. tariffs & retaliatory measures.
While for China, its growth is projected to decelerate to 5.9% in 2020, a 0.2 % point reduction from the June 2019 estimate due to facing the U.S. sanctions.
iii.Regional growth: In comparison, Bangladesh will be ahead compared to India. Its GDP growth rate is estimated to be 7.2%, while in Pakistan it is expected to be at 3 % & Sri Lanka’s growth rates at 3.3% for FY-20.
iv.Other estimation: World Bank’s estimates are in line with the other predictions. Earlier,the Central Statistics Office) of the Ministry of Statistics and Programme Implementation (MoSPI) projected GDP growth of India at 5% which is 11-year low. The Reserve Bank of India (RBI) also lowered GDP estimates from 6.1 % to 5%.
About World Bank:
Motto– Working for a World Free of Poverty
Formation– July 1944
Headquarters– Washington, D.C., U.S
President– David Malpass