Global Economic Prospects by World Bank: What is to say about India’s growth
World Bank, the global financial institution has reduced India’s growth rate to 5% from the earlier prediction of 6% for the year 2020. This move came after the National Statistical Office (NSO) placed India’s GDP at 5% for the current financial year.
Lowest GDP in 11 years
This is the lowest our GDP has gone in the last 11 years. The last such GDP was in 2008 at 3.9%. According to NSO, the economy will witness a deceleration in various sectors such as manufacturing, construction, agriculture, trade, electricity, hotel and transport sector, financial, real estate gas and water supply and professional services.
What does the latest report say?
According to the report released by World Bank- Global Economic Prospects, the main weakness in the credit and NBFCs (Non-Banking Financial Companies) will linger. It also cited weak confidence and liquidity issues in the financial sector as major reasons for India’s weak economic growth. The reason for such low business confidence was seen due to low consumer demand.
However, it also said that a gradual recovery is expected in the second half of the fiscal year. Our neighbor, Bangladesh saw much better economic growth, with its GDP figures reaching above 7 points.
The report also said that global economic growth would be around 2.5%. The report also mentioned the risk of a global debt crisis. This can be attributed to the large scale borrowing that has taken place in the last 50 years. It stated that the global economy has experienced four waves of debt accumulation in advanced, emerging and developing economies over the past fifty years.
It is the fourth and the most recent wave that began in 2010 which has caused such high debts, more than the last 3 waves. Since 1970, the global debt has reached around 230 percent of GDP in 2018. One of the major contributors to this debt was seen as the large sale borrowings made by China. There is an urgent need to focus on productivity and take steps that will rebuild the economy.
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