The World Bank on Wednesday lowered its projection for India’s economic growth from 6% to 5% in 2019-’20 fiscal year, but said it would recover to 5.8% in the following year, PTI reported. The projection for 2019-’20 is in line with the estimates given by the Indian government and the Reserve Bank of India.

In its report, the World Bank said tighter credit conditions in the non-banking sector in India were contributing to a substantial weakening of domestic demand. “In India, activity was constrained by insufficient credit availability, as well as by subdued private consumption,” the report said.

“Growth in India is projected to decelerate to 5% in FY 2019-20 amid enduring financial sector issues,” said the report. “Key risks to the outlook include a sharper-than-expected slowdown in major economies, a re-escalation of regional geopolitical tensions, and a setback in reforms to address impaired balance sheets in the financial and corporate sectors.”

The World Bank said that economic activity slowed substantially in 2019, with the deceleration most pronounced in the manufacturing and agriculture sectors. Government-related services and sub-sectors, however, received significant support from public spending, the bank said.

On Tuesday, the government released the first advance estimates for economic growth in 2019-’20, pegging it at 5%. If this bears out, it will be the slowest annual growth in Gross Domestic Product since 2008-’09. Weakening consumption and stagnating private investment are believed to be the reasons behind the economic slowdown.

Last month, the Reserve Bank of India had also lowered its projection for the economic growth rate to 5% for 2019-’20, just two months after it had forecast a 6.1% growth rate. The central bank cited weak domestic and external demand as a reason for the downward projection.

The latest projections are bad news for investors, and come at a time when the Indian economy is faltering. Figures released in November showed that GDP growth slumped to a six-year low the month before , while industrial output contracted. In November, the output of eight core infrastructure industries declined 1.5% – the fourth straight month of a contraction – compared to November 2018.

In the last few months, core sectors such as automobiles and manufacturing have slowed down because of weakened consumer demand and dearth of investments.