Indian economic growth to decelerate to just 5% in 2019-20 and grow by 5.8% in 2020-21 – According to Global Economic Prospects report 2020, World Bank

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  Indian economic growth to decelerate to just 5% in 2019-20 and grow by 5.8% in 2020-21 – According to Global Economic Prospects report 2020, World Bank

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1. Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist.
2. Growth among advanced economies as a group is anticipated to slip to 1.4% in 2020 in part due to continued softness in manufacturing. 
3. Growth in emerging market and developing economies is expected to accelerate this year to 4.1%. This rebound is not broad-based; instead, it assumes improved performance of a small group of large economies, some of which are emerging from a period of substantial weakness. 
4. About a third of emerging market and developing economies are projected to decelerate this year due to weaker-than-expected exports and investment.
5. U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty.
6. Euro Area growth is projected to slip to a downwardly revised 1% in 2020 amid weak industrial activity.
7. Analytical sections in this edition of Global Economic Prospects address key current topics -
8. The Fourth Wave: There have been four waves of debt accumulation in developing and emerging economies in the last 50 years. The latest wave, which started in 2010, has seen the largest, fastest, and most broad-based increase in debt among the four. While current low levels of interest rates mitigate some of the risks associated with high debt, previous waves of broad-based debt accumulation ended with widespread financial crises. Policy options to reduce the likelihood of crises and lessen their impact should they materialize include building resilient monetary and fiscal frameworks, instituting robust supervisory and regulatory regimes, and following transparent debt management practices.
9. How to Rekindle Productivity Growth: Productivity growth, a primary source of income growth and driver of poverty reduction, has slowed more broadly and steeply since the global financial crisis than at any time in four decades. In emerging market and developing economies, the slowdown has reflected weakness in investment and moderating efficiency gains as well as dwindling resource reallocation between sectors. The pace of improvements in many key drivers of labour productivity—including education and institutions—has slowed or stagnated since the global financial crisis.
10. Price Controls: The use of price controls is widespread in emerging market and developing economies. While sometimes used as a tool for social policy, price controls can dampen investment and growth, worsen poverty outcomes, cause countries to incur heavy fiscal burdens, and complicate the effective conduct of monetary policy. Replacing price controls with expanded and better-targeted social safety nets, reforms to encourage competition and a sound regulatory environment can be pro-poor and pro-growth.  
11. Inflation in Low-Income Countries: Inflation in low-income countries has tumbled to a median of 3% in mid-2019 from 25% in 1994. The decline has been supported by more flexible exchange rate regimes, greater central bank independence, lower government debt, and a more benign external environment. However, to maintain low and stable inflation amid mounting fiscal pressures and the risk of exchange rate shocks, policymakers need to strengthen monetary policy frameworks and central bank capacity and replace price controls with more efficient policies.

Regional Outlooks –

1. East Asia and Pacific: Growth in the region is projected to ease to 5.7% in 2020, reflecting a further moderate slowdown in China to 5.9% this year amid continued domestic and external headwinds, including the lingering impact of trade tensions.
2. Europe and Central Asia: Regional growth is expected to firm to 2.6% in 2020, assuming stabilization of key commodity prices and Euro Area growth and recovery in Turkey (to 3%) and Russia (to 1.6%). 
3. Latin America and the Caribbean: Regional growth is expected to rise to 1.8% in 2020, as growth in the largest economies strengthens and domestic demand picks up at the regional level. 
4. Middle East and North Africa: Regional growth is projected to accelerate to a modest 2.4% in 2020, largely on higher investment and stronger business climates. Among oil exporters, growth may pick up to 2%. 
5. South Asia: Growth in the region is expected to rise to 5.5% in 2020, assuming a modest rebound in domestic demand and as economic activity benefits from policy accommodation in India and Sri Lanka and improved business confidence and support from infrastructure investments in Afghanistan, Bangladesh, and Pakistan. In India, where weakness in credit from non-bank financial companies is expected to linger, growth is projected to slow to 5% in FY 2019/20, which ends March 31 and recover to 5.8% the following fiscal year. 
6. Sub-Saharan Africa: Regional growth is expected to pick up to 2.9% in 2020, assuming investor confidence improves in some large economies, energy bottlenecks ease, a pickup in oil production contributes to recovery in oil exporters and robust growth continues among agricultural commodity exporters. 
7. Download the January 2020 Global Economic Prospects report -
8. https://www.worldbank.org/en/publication/global-economic-prospects

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