A World Bank report projects India’s growth at 7.8% in 2016-17 amid projected weak global growth at 2.95%
Washington: India, the dominant economy in the South Asian region, is projected to grow at a faster 7.8 percent in fiscal 2016-17 with growth in the region, speeding up to 7.3 percent in 2016 from 7 percent in the year just ended, a new World Bank report said on Wednesday.
Weak growth among major emerging markets with only the South Asia region, led by India, projected to be a bright spot, will weigh on global growth in 2016. But economic activity should still pick up modestly to a 2.9 percent pace, from 2.4 percent growth in 2015, as advanced economies gain speed, said the World Bank’s January 2016 Global Economic Prospects released here.
South Asia region is a net importer of oil and will benefit from lower global energy prices. At the same time, because of relatively low global integration, the region is shielded from growth fluctuations in other economies, the report said.
Simultaneous weakness in most major emerging markets is a concern for achieving the goals of poverty reduction and shared prosperity because those countries have been powerful contributors to global growth for the past decade, the bank said.
Spillovers from major emerging markets will constrain growth in developing countries and pose a threat to hard-won gains in raising people out of poverty, the report warned.
Global economic growth was less than expected in 2015, when falling commodity prices, flagging trade and capital flows, and episodes of financial volatility sapped economic activity.
Firmer growth ahead will depend on continued momentum in high income countries, the stabilization of commodity prices, and China’s gradual transition towards a more consumption and services-based growth model.
Developing economies are forecast to expand by 4.8 percent in 2016, less than expected earlier, but up from a post-crisis low of 4.3 percent in the year just ended.
Growth is projected to slow further in China, while Russia and Brazil are expected to remain in recession in 2016.
“There is greater divergence in performance among emerging economies. Compared to six months ago, the risks have increased, particularly those associated with the possibility of a disorderly slowdown in a major emerging economy,” said World Bank Group Vice President and Chief Economist Kaushik Basu.
“A combination of fiscal and central bank policies can be helpful in mitigating these risks and supporting growth.”
Although unlikely, a faster-than-expected slowdown in large emerging economies could have global repercussions, the report said.
Risks to the outlook also include financial stress around the US Federal Reserve tightening cycle and heightened geopolitical tensions, it said. (Arun Kumar, IANS) (Photo:www.odishanewsinsight.com)
Thailand’s poverty rate has been rising in recent years despite steady, if slow, overall economic growth, a new World Bank report says, widening the gap between rich and poor in Southeast Asia’s second-largest economy.
“Taking the Pulse of Poverty and Inequality in Thailand,” launched last week, says the country’s poverty rate jumped from 7.2% to 9.8% between 2015 and 2018, adding nearly 2 million new people to the ranks of the poor. Inequality, as measured by household consumption, also spiked in 2016 for the first time in four years and has eased little since.
Analysts see a direct link between those figures and the results of last year’s general elections, Thailand’s first since a 2014 military coup led by then-General Prayut Chan-ocha, now the country’s prime minister.
Pheu Thai, a party tied to former Prime Minister Thaksin Shinawatra, won the second most votes and the largest share of seats in the popularly elected House of Representatives, the lower house of the National Assembly, with strong support from some of the country’s poorest provinces in the North and Northeast.
A junta-appointed Senate and Election Commission finally tipped the contest to form a majority government in Prayut’s favor, but the numbers echoed the lasting disaffection of the country’s poor.
“Plummeting incomes were clearly a major factor in the opposition’s strong showing in the 2019 general election. That is why Pheu Thai did so well — especially given that rural farmers and also urban households continue to be attracted by the populism of Thaksin,” said Paul Chambers, a political analyst and lecturer at Thailand’s Naresuan University.
Thaksin was first elected prime minister in 2001, after the shock of the Asian financial crisis of the late 1990s, and reelected four years later only to be kicked out of office by a military coup in 2006. The telecoms tycoon now lives abroad, avoiding a 2008 corruption conviction that he disputes. However, the subsidies, cash transfers and other populist policies he pushed have left him and his proxies with a loyal following among the farmers of Thailand’s rural North and Northeast, who feel left behind by an urban elite cloistered mostly in the capital, Bangkok.
“That is partly why Thaksin was able to rise in the early 2000s, because of grievances over this disproportionate allocation of resources,” said Harrison Cheng, an associate director with consulting firm Control Risks who follows Thailand.
He said the concentration of wealth and power in Bangkok has continued under Prayut.
The World Bank report backs him up. It shows poverty hovering steadily at about 2% between 2015 and 2018 in Bangkok while rising everywhere else, nowhere more so than in the strife-torn South. Riven by a Muslim insurgency, the South became the country’s poorest region in 2017, only just edging out the Northeast with a poverty rate of about 12%. The South again topped the Northeast in 2018 with a poverty rate just over 14%.
The report ascribes the latest rises in poverty and inequality to droughts, slow economic growth and falling incomes among both rural farmers and urban businesses.
The bank says Thailand has now seen four such spikes since 2000, more than any of the other nine Association of Southeast Asian Nations countries.
The report’s author, Judy Yang, attributes that, at least in part, to slow wage growth during the period, slower than in any of the bloc’s other large economies.
“If you are a household, what really pulls you out of poverty is getting a better-paying job, getting more income, getting labor market income,” she said.
What also sets Thailand apart is its political turmoil. The coup-prone country has seen four swings between military and civilian rule since 2006, governments cut short by controversial court orders and several rounds of mass protests, some of them deadly.
The World Bank said many of Thailand’s poverty spikes coincided with regional or global financial crises or with drought but added that periods of political instability also tend to depress consumption and investment, which can drive incomes down and poverty rates up.
Cheng, of Control Risks, said his conversations with clients confirm that Thailand’s volatile politics have kept many potential investors at bay, holding the economy back.
“A lot of the investors are staying away and taking a wait-and-see approach for a long, long time now,” he said.
“If they are not in Thailand already, they will be thinking very seriously about whether they should do so because what if there’s a change in government again? What if there are massive street protests like in 2013, 2014? Are you going to repeat the 2010 Bangkok standoff between the Red Shirts and the military?” he added, referring to Thaksin supporters by their color-coded apparel of choice.
Cheng said the constant and sudden turnover in governments has also fostered a habit of short-term policy prescriptions on poverty and inequality that have done more to soothe the symptoms than cure the causes.
Chambers and Cheng agreed that if the latest bout of bad numbers gets worse, Prayut’s problems will also be increased by swelling ranks of not just the poor but also of disenchanted voters.
The World Bank report proffers poverty and inequality figures only up to 2018 but adds that “trends beyond this year are not optimistic, given continued low economic growth rates and stagnant wages.”
Another severe drought devastated farmers last year as the country’s gross domestic product growth rank sank to 2.4%, its lowest since 2014. GDP forecasts for 2020 are even worse, owing much to the novel corona virus outbreak, which has hit the country’s important tourism sector hard.
To counter those blows, Prayut’s government has ramped up and introduced new social welfare programs for the poorest households and last week approved a stimulus package expected to pump some $12.6 billion into the economy.
The World Bank recommends that authorities continue to strengthen the country’s safety net and create better jobs for low-income earners in the short term. In the longer term, it says giving all children equal access to health and education opportunities would be the best way to make future generations more prosperous and more equal. (VOA)