India leading the race for GDP growth surpassing China – World Bank Report
DSIJ Intelligence / 11 Jun 2015
For the first time India is expected to surpass China with respect to GDP growth as per World Bank’s growth chart of major economies.
Global Economic Prospects (GEP) is the World Bank Group’s flagship report. The latest issue for the month of June has been published by World Bank with detailed commentary on Global economy.
For the first time India is expected to surpass China with respect to GDP growth as per World Bank’s growth chart of major economies. As per the report Global economy is expected to grow by 2.5 per cent in 2015 and expected to moderately strengthen to 3.2 percent by 2016-17. Developing country growth is expected to be at 4.4 percent in 2015 and is expected to be around 5.3 percent in 2016-17. The report also talks about quantitative easing happening in Europe which may lead to portfolio money flows to the developing countries.As per the report “Growth is expected to firm to 7.1 percent in 2015 and 7.4 percent in 2016–17, buoyed by a reinvigorated reform agenda in India and supported by strengthening demand in high-income countries. The decline in global oil prices has benefited the region, improving fiscal and current account balances, enabling subsidy reforms to proceed in India, and facilitating an easing of monetary policy”.The report suggests in India, gradual implementation of reforms has supported business and investor confidence and encouraged capital inflows. However, credit growth remains modest, reflecting weak bank balance sheets (mainly in public sector banks). This is holding back credit-financed investment.
The GDP growth for India is expected to touch 8 percent in 2017 according to the report and for China the growth is expected to moderate to 6.9 percent in 2017. As suggested in the report growth in South Asia is expected to continue led by a cyclical recovery in India and supported by a gradual strengthening of demand in high-income countries. BRICS is expected to deliver a growth of 4.7 percent showing negative growth. Previous year BRICS grew at rate of 5 percent. BRICS is expected to moderately strengthen to 5.5 percent for the year 2016. Brazil has dipped into negative growth. Brazil has de grown from 1 percent in 2012 to 0.1 percent in 2014. Russia also has de grown from 3.4 percent in 2012 to 0.7 percent in 2014. Both these countries have been dragging the BRICS performance.
Interestingly Bangladesh and Pakistan have clocked decent GDP growth and are expected to do well in coming years. Whiles South east Asia may be showing good growth in the region (Asia) World Bank Group President Jim Yong Kim has following warning for the developing economies “Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment”.
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