India’s gross domestic product is expected to spike to 7.2% in the 2017-’18 financial year from 6.8% the previous fiscal, according to a new World Bank report titled “Globalization Backlash”, which was released on Sunday. The international agency forecast that India’s economic growth will rise gradually to 7.7% in 2019-’20, “underpinned by a recovery in private investments”.
“Despite renewed weakness in private investment and limited lift from external demand, India was poised to continue growing robustly until ‘demonetisation’ dented growth, albeit modestly,” the report said. The agency expects the “fiscal, inflation and external conditions” in India to remain stable and inflation to stabilise with the support of “favorable [investment] weather and structural reforms”.
The World Bank analysis, however, has warned against “significant risks to India’s favorable growth outlook”. Among them, it has highlighted uncertainties in the global environment, an unclear picture of the impact demonetisation has had on small and informal firms, hindrances to private investment and rapid hikes in the prices of oil and other commodities. But a “timely and smooth implementation of the GST could prove to be a significant upside risk to economic activity in FY17/18”, the report said.
The World Bank’s “Globalization Backlash” report focuses on the economic climate in South Asia, predicting that growth in the region “will maintain momentum”. “South Asia remains the fastest growing region in the world,” the report said, adding that the “strong performance” in the eastern part of the region, in particular in India, Bhutan and Bangladesh, “defied disappointing world growth in 2016”. “The current globalization backlash should thus not dissuade South Asian countries from having a stronger outward orientation,” it said.