World Bank cuts growth forecast for India

The Bank has scaled it down from 6.1 percent (January figure) to 5.7 percent

GN Bureau | June 13, 2013



The rosiness of the India growth story is fading fast. Now, the World Bank joins a series of global institutions pessimistic about it. Its latest estimates eroded 0.4 percent from the one it made in January (6.1 percent) for the current fiscal year. Now, the Bank projects growth to happen at 5.7 percent in its Global Economic Prospects (GEP) report released on Thursday.

The Bank has cut its growth forecast for Brazil and China, both part of the emerging economy club BRICS (Brazil, India, Russia, China and South Africa).

For China, the growth forecast was 8.4 percent in January. It is now 7.7 percent. Brazil's growth, the Bank predicts, will slip from to 2.9 percent. The report said that the growth slowdown in the emerging economies is due to supply bottlenecks in India, Brazil, China and others while stubborn contraction continues to cloud the Euro zone.

"While external risks have eased, growth in these countries is unlikely to reach pre-crisis rates unless supply-side reforms are completed," said the report.

The report mentioned that the Indian economy will grow at 6.5 percent and 6.7 percent in 2014 and 2015 respectively.

"However, the pick-up in developing countries will be modest because of capacity constraints in several middle income countries," it said.

The report also mentioned that the global gross domestic product (GDP) is expected to expand about 2.2 percent this year and strengthen to 3.0 percent and 3.3 percent in 2014 and 2015.

“The world economy is slowly getting back on its feet,” said the report.

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