Washington, Oct 5, Improved investor sentiment and resilience to external shocks are expected to increase India’s GDP growth rate to 7.5 percent during 2015-16 and further to 7.8 percent in the next fiscal year, predicts the World Bank.
The Gross Domestic Product (GDP) growth, as per the bank, is lifted by cheap oil prices and the country’s limited exposure to the global financial turmoil.
“However, delays in the adoption and implementation of key reforms could affect investor sentiment. A weak trade performance and financial sector vulnerabilities could also hold back GDP growth,” said the World Bank in a statement.
According to the twice-a-year South Asia Economic Focus, this positive performance hinges on solid growth in services, domestic consumption, and a gradual rise of investments. Limited exposure to the financial turmoil and an improved external position have given most South Asian countries important policy space.
South Asia is expected to maintain its lead as the fastest-growing region in the world, with economic growth forecast to accelerate from 7 percent in 2015 to 7.4 percent in 2016.
“Thanks to low food and commodity prices, as well as a slowdown in the growth of administered prices, inflationary pressures have eased markedly in South Asia. Yet the pace of disinflation varies depending on the price index considered,” it said.
As per the report, South Asia could actually have cheaper prices, faster growth and bigger economies than previously thought.
“While the region is now in a position of strength, structural constraints holding back export and investment growth do persist. To keep the momentum and accelerate job creation, governments should enact reforms easing infrastructure bottlenecks and paving the way to greater competitiveness,” said the bank’s chief economist for south Asia, Martin Rama.