Washington: As the global economy deteriorates sharply, the World Bank has projected a slower 4 percent growth for India in 2009, down from 5.5 percent in 2008, before picking up speed to reach 7 percent in 2010.
World Bank estimates released on Tuesday have reduced its November 2008 projection of 5.8 percent growth for India in 2009 rising to 7.7 percent in 2010.
GDP growth in the developing world as a whole will slow to a projected 2.1 percent in 2009 from 5.8 percent in 2008. But without India and China their growth would grind down from 4.6 percent last year to a complete halt in 2009 before slowly recovering to 2.67 percent in 2010 instead of growing at 2.9 percent and 4.7 percent respectively as predicted earlier.
The Bank has more than halved its November 2008 projection of 4.4 percent growth in developing countries in 2009, reflecting the rapid deterioration of global financial and economic conditions.
The new Global Economic Prospects update also notes that global growth is expected to contract by 1.7 percent this year. This would be the first decline in world output growth since World War II. GDP is projected to decline by 3 percent in OECD countries and by 2 percent in other high-income economies.
The World Bank's baseline forecast predicts growth momentum to turn weakly positive in 2010 as financial-sector consolidation, lost wealth and knock-on effects from the financial crisis continue to dampen economic activity. However, the pace and timing of the recovery is still highly uncertain.
South Asia has been marked down to 3.7 percent growth for 2009 from 5.4 percent anticipated earlier - and down from 5.6 percent registered in 2008. The region's growth projection for 2010 too has been reduced from 7.2 percent to 6.2 percent.
Though terms of trade have moved in favour of the region with the falloff in oil prices, weakening demand in export markets (including burgeoning India-China trade) is being felt sharply, as is a tempering of services exports from India's high-tech centres, as capital spending wanes globally, the update said.
Remittances are anticipated to ease as conditions in host countries falter, albeit with some lag. Capital inflows have diminished, contributing to falloff in investment growth, notably in India. Fiscal support for slowing economies may face constraints in already quite high budget deficits.
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