S Asia to buck global slowdown trend

The World Bank today projected an increase in the economic growth rate in South Asia in 2005 owing to a recovery in the agricultural sector next year. However, global growth is estimated to slow down to 3.2 per cent in the next two years.

The global economic growth rate for 2004 is estimated at 4 per cent due to the boom in China and recoveries in Japan and the US.

The slowdown in the global growth rate in 2005 and 2006 was attributed to an anticipated slowdown in the US, higher commodity and oil prices and higher interest rates retarding the pace of investment, the World Bank said in the Global Economic Prospects 2005 released today.

"The world economy accelerated sharply in 2004, expanding by an estimated 4 per cent. Even stronger growth was experienced by a number of large developing countries, notably China (8.8 per cent), Russia (8 per cent) and India (6 per cent)," the report said.

The robust growth in these countries pushed up the overall growth of developing nations to 6.1 per cent in 2004.

The South Asian region posted 7.5 per cent growth in 2003, powered by a robust 8.2 per cent growth in India during 2003-04.

India, which contributes 80 per cent to South Asia's output, is slated to grow by 6-6.5 per cent this year.

Considering India's growth prospects, the World Bank expects the region to log 6.3 per cent growth in 2005, but it is slated to come down marginally to 6 per cent in 2006.

"In South Asia, growth is expected to accelerate in 2005, reflecting the enduring impact of structural reforms, market opening, and stronger domestic demand as the dampening impact of last year's poor crop fades," it said.

"As agricultural production and related incomes return to trend growth rates in 2006, GDP growth is projected to moderate somewhat (to 6 per cent)," the report added.