The World Bank on Wednesday trimmed its growth prediction for India to 4.7 percent in 2013, however stated it must pick up the pace in 2014
The World Bank on Wednesday trimmed its growth prediction for India to 4.7 percent in 2013, however stated it must pick up the pace in 2014 as the Indian currency’s drop converts into an export-led increase for Asia’s third-largest economy.
Reportedly, the Bank’s chief South Asia economist, Martin Rama, said the rupee’s fresh sink against the dollar has made India’s exchange rate more aggressive than the developing country standard, giving the nation’s exports an opportunity to surpass budding market contenders.
He said in a news conference, “We remain upbeat on growth potential.”
According to the World Bank, growth in India’s gross domestic product ought to rise in the 2014-15 financial year to 6.2 percent.
This year’s prediction of 4.7 percent growth, mostly in line with many private economists, was behind from an April prediction of 6.1 percent, with the bank holding responsible the factors counting a slowdown in manufacturing and investment and feeble business confidence in the midst of high interest rates.
But the forecast by the World Bank, whose spotlight is on poverty abolition through growth and development, was almost one percentage point above the 3.8 percent growth projection made by the International Monetary Fund (IMF), its sister organisation, previously this month.
The IMF, which also referred to dreary activity in manufacturing and high interest rates as dampening demand and discouraging investment, said stronger exports ought to elevate India’s growth rate to five percent in 2014.
The IMF projection had infuriated India’s Congress-led UPA government, which is struggling to turn the economy roughly ahead of 2014 general elections.
The government, which has predicted five to 5.5 percent growth for this year, termed the IMF’s forecasts ‘overly pessimistic’ and asked for a review of its method.
Reportedly, Martin said the Bank observes ‘an optimistic viewpoint (for India) growing forward’, mentioning low core inflation, a likely bumper farm crop, stronger exports and the government’s stepped-up promise to economic reforms.
The Bank said, while output growth in the first quarter of this financial year cut down to 4.4 percent, it must bounce back robustly in the second half, beating around six percent or more in the final quarter.
India registered five percent growth last year, the slowest in a decade, and far under the ‘Indian Summer’ of the last decade, when annual growth frequently topped eight and nine percent.
India’s slump comes as neighbouring China is predicted by the World Bank to attain its growth target of 7.5 percent this year.