India is projected to regain its position as the world's fastest growing major economy advancing 7.3 per cent this fiscal year and 7.5 per cent in the next two “as factors holding back growth in India fade,” according to World Bank forecasts.
The growth projections reflect “robust private consumption and strengthening investment,” the bank's Global Economics Prospects report released Tuesday said.
“India’s GDP growth bottomed out in the middle of 2017 after slowing for five consecutive quarters, and has since improved significantly, with momentum carrying over into 2018 on the back of a recovery in investment,” the report said.
India has overcome the temporary disruptions caused by the implementation of the Goods and Services Tax (GST) by mid-2017, and manufacturing output and industrial production have continued to firm, it added.
Per capita growth rates “are strong” and are expected to help bring down poverty in coming years, it said.
World Bank forecasts are slightly lower than two other projections by international bodies published in the last two months.
Last month the United Nations projected a growth rate of 7.5 percent for this year and 7.6 percent for the next year while in April the International Monetary Fund forecast 7.4 per cent for this year and 7.8 percent the next.
The Bank said that in India there has been a further deterioration in trade and current account balances because of accelerating import grown amid strengthening domestic demand and higher energy prices.
The global economic picture painted by the Bank is not as rosy as it is for India.
“After reaching 3.1 percent in both 2017 and 2018, global growth is expected to moderate over the next two years as global slack dissipates, major central banks gradually remove policy accommodation, and the recovery in commodity exporters matures,” the report said.
It expected the global growth rate to go down to 3 percent next year and 2.9 in 2020.