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The World Bank today forecast growth in India's gross domestic product (GDP) to stand at 6.7 per cent in 2015-16, primarily owing to a boost in exports and private investment. At factor cost, GDP is projected to grow 5.7 per cent this financial year, and then accelerate to 6.5 per cent and 6.7 per cent in the two subsequent financial years, respectively, it said.
In its Global Economic Prospects report, the multilateral lending agency said growth in South Asia would primarily be driven by an estimated pick-up in India. Exports and private investment, which slowed sharply last year, are projected to strengthen during the 2013-15 period and provide a boost to growth.
However, how robust the recovery would be would depend on the pace of policy and fiscal reforms, as well as downside risks.
Risks to the outlook include a faster-than-projected pick-up in global demand and a larger-than-expected decline in commodity prices, the report said.
It added greater dependence on foreign investment inflows to finance the government's significantly large current account deficit had increased its vulnerability to a sudden reversal of investor sentiment.
“Several factors could result in a slow-down or a reversal of investment inflows — an unanticipated monetary tightening in some high-income countries; resurgence of debt tensions; escalation of geopolitical conflict; and even disenchantment with the pace or nature of domestic reforms,” it said.
Also, the relaxed monetary policy in Japan could result in strong and disruptive private capital flows, it added.
Noting the business sentiment in India’s manufacturing sector had weakened to a four-year low in May, the report said if this remained weak in the coming months, it could adversely impact investment and growth.
In its Global Economic Prospects report, the multilateral lending agency said growth in South Asia would primarily be driven by an estimated pick-up in India. Exports and private investment, which slowed sharply last year, are projected to strengthen during the 2013-15 period and provide a boost to growth.
However, how robust the recovery would be would depend on the pace of policy and fiscal reforms, as well as downside risks.
Risks to the outlook include a faster-than-projected pick-up in global demand and a larger-than-expected decline in commodity prices, the report said.
It added greater dependence on foreign investment inflows to finance the government's significantly large current account deficit had increased its vulnerability to a sudden reversal of investor sentiment.
“Several factors could result in a slow-down or a reversal of investment inflows — an unanticipated monetary tightening in some high-income countries; resurgence of debt tensions; escalation of geopolitical conflict; and even disenchantment with the pace or nature of domestic reforms,” it said.
Also, the relaxed monetary policy in Japan could result in strong and disruptive private capital flows, it added.
Noting the business sentiment in India’s manufacturing sector had weakened to a four-year low in May, the report said if this remained weak in the coming months, it could adversely impact investment and growth.
