The World Bank cut its economic growth forecast for India to 6% for the current fiscal from its April projection of 7.5%, citing a broad-based and severe cyclical slowdown. Growth is expected to gradually recover to 6.9% in 2020-21 and to 7.2% the following year, the bank said in its South Asian Economic Focus report released on Sunday. India's cyclical slowdown is severe. Quarterly GDP growth slowed for 5 quarters in a row, declining from a peak of 8.1% in the first quarter of 2018 to only 5% in the second quarter of this year, the bank noted.
According to the World Bank, the Indian growth decelerated by 3 percentage points in the last year and growth in the second quarter of this year was the lowest in over six years. Manufacturing growth fell from over 10% a year ago to below 1 percent in the second quarter of 2019. This drop follows the global trend but is more pronounced. Services and construction also started decelerating over the last quarters, suggesting that the slowdown is not related to idiosyncratic factors related to a specific sector. Export growth recently declined - in line with slowing world growth and weak external demand - but cannot alone explain India's sharp downturn.
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