Global Economic Prospects (GEP) Report; World Bank

• In January 2020, the World Bank released its Global Economic Prospect.

Its projection for the year 2020

• The World Bank predicted India’s economy to contract by 9.6% in the 2020-’21 financial year and recover to 5.4% in the next fiscal.
• According to it, global growth is projected at 2.5 percent in 2020, just above the post-crisis low registered last year
• While growth could be stronger if reduced trade tensions mitigate uncertainty, the balance of risks is to the downside.
• A steep productivity growth slowdown has been underway in emerging and developing economies since the global financial crisis, despite the largest, fastest, and most broad-based accumulation of debt since the 1970s.
• These circumstances add urgency to the need to rebuild macroeconomic policy space and undertake reforms to rekindle productivity.

Its projection for India

• The report cuts India’s growth for the financial year 2020 to 5% from 6% estimated earlier.
• This is the slowest growth forecast since the 3.1% rate recorded in the financial year 2008-09 when the global financial crisis had derailed the economy.
• In India, the weakness in credit from non-bank financial companies is expected to linger.

Regional growth

• In comparison, the report forecasts Bangladesh’s growth to ease to 7.2% for the fi scal year ending June. While Pakistan and Sri Lanka’s growth rates are expected to rise to 3% and 3.3%, respectively, in FY20.
• It also estimates growth to rise to 5.5% for the South Asian region as a whole in the calendar year 2020, on the assumption of a modest rebound in domestic demand and accommodative policy in India and Sri Lanka.
• The report also cites improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan for the expected uptick.