: International News
India to grow at a slower 8 percent: World Bank
Washington, June 08, 2011
With India's growth projected to ease
to 8 percent in fiscal 2011-12 from 8.8 percent last fiscal,
South Asia is headed for a slower, but still buoyant 7.5
percent growth in 2011, says the World Bank.
After growing at a robust 9.3 percent during calendar year
2010, activity in South Asia moderated in the first quarter of
2011, it said in its June 2011 edition of Global Economic
Noting that the regional economic slowdown in 2011 mainly
reflects a fall-off in activity in India, which represents
about 80 percent of South Asia's GDP, the Bank said the
slowdown stems from a moderation in domestic demand.
Elevated inflationary pressures have cut into disposable
incomes and household spending and more restrictive monetary
conditions have contributed to a dampening of investment
activity, the GEP noted
This slowdown partly also reflects macroeconomic policy
tightening aimed at curbing stubbornly high price pressures
and reducing large fiscal deficits, the Bank said.
The moderate compression of domestic demand has been partly
offset by strong exports, as countries in South Asia have
benefited from robust import demand in developing countries,
recovering demand in high-income countries and resilient
worker remittances inflows.
The Bank suggested that as they put the financial crisis
behind them, developing countries need to focus on tackling
country-specific challenges such as achieving balanced growth
through structural reforms, coping with inflationary
pressures, and dealing with high commodity prices.
In contrast, prospects for high-income countries and many of
Europe's developing countries remain clouded by crisis-related
problems such as high unemployment, household and
banking-sector budget consolidation, and concerns over fiscal
sustainability among other factors.
The World Bank projected that as developing countries reach
full capacity, growth will slow from 7.3 percent in 2010 to
around 6.3 percent each year from 2011-2013.
High-income countries will see growth slow from 2.7 percent in
2010 to 2.2 percent in 2011 before picking up to 2.7 percent
and 2.6 percent in 2012 and 2013 respectively.
"Globally, GDP is expected to grow 3.2 percent in 2011 before
edging up to 3.6 percent in 2012," said Justin Yifu Lin, the
World Bank's Chief Economist and Senior Vice President for
"But further increases in already high oil and food prices
could significantly curb economic growth and hurt the poor."