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World Bank projects bright Indian growth for 2016-17 amid weak global growth

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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)

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World Bank: Russia Banking Sector Remains at Risk Despite Recent State Costly Bailouts

"The banking sector remains afflicted with high concentration and state dominance," the World Bank said in the report

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world bank, russia banking sector
A Russian flag flies over the headquarters of the country's central bank in Moscow (file photo) RFERL

The World Bank says Russia’s banking sector is stabilizing but remains at risk despite recent state bailouts of Russian banks totaling tens of billions of dollars.

In a scheduled report dated June 10, the Washington-based lender estimated that state-owned banks now account for 62 percent of all assets at Russian banks following the closure of hundreds of lenders in recent years and the rescue of several major financial institutions.

“The banking sector remains afflicted with high concentration and state dominance,” the World Bank said in the report. The warning comes less than a week after the World Bank, the lending arm of the International Monetary Fund, cut Russia’s 2019 economic growth forecast to 1.2 percent from a previous estimate of 1.5 percent because of oil production cuts.

world bank, russia banking sector
“The banking sector remains afflicted with high concentration and state dominance,” the World Bank said in the report. Pixabay

While the bank said Russia’s macroeconomic and fiscal buffers were strong, economic growth prospects remained modest. “Downside risks to Russia’s growth outlook stem from the potential expansion of sanctions, deterioration of financial market sentiment, souring global trade environment and a dramatic drop in oil prices,” the report said.

Russia’s business climate faces stiff headwinds for many reasons, including the economic sanctions imposed by the United States, Japan, and European allies for Moscow’s 2014 seizure of Crimea, along with alleged Russian interference in U.S. elections.

ALSO READ: Russia-Backed YouTube Channels Spread Disinformation, Generates Millions of Dollars in Ad Revenue

The World Bank projected annual economic growth for the years 2020 and 2021 at 1.8 percent. “On the upside, national projects aimed at strengthening human capital and increasing productivity, if well-implemented, could positively affect Russia’s potential growth in the medium-term,” the bank said in its report.

Russia’s economy expanded 2.3 percent in 2018, aided in large part by one-off projects, buoyant energy prices, and an influx of tourists for the soccer World Cup. (RFERL)