Global trade, it said, slowed in the second half of 2022 which showed the slowdown in industrial production and economic activity across advanced economies. China witnessed its slowest pace in economic activity since the mid-1970s due to COVID-19 related restrictions, droughts, and ongoing property sector stress. However, high frequency indicators improved in January and February aided by the reopening of the Chinese economy. Also, growth outcomes for the United States and the euro area in the fourth quarter of calendar year 2022 were also better than expected, the World Bank said. Financial conditions eased in January-February 2023 with an increase in financial flows to emerging Markets and Developing Economies .
Domestic consumption is held back by the tighter fiscal situation,” Hans Timmer, World Bank Chief Economist for South Asia, told reporters during a news conference here. The current account deficit is adequately financed by improving foreign direct investment inflows and a solid cushion of foreign exchange reserves. Growth was underpinned by strong investment activity bolstered by the government’s capex push and buoyant private consumption, particularly among higher income earners, it says. The UN report also noted improved growth projections for the world’s three largest economies. China’s growth prospects were raised by 0.5 percent to 5.3 percent due to the easing of Covid restrictions, leading to a recovery in consumer spending and investments.
CPI-based retail inflation is showing signs of moderation, according to government data, however, still remains above the central bank’s upper tolerance level of 6 per cent since January this year. Echoing similar views, the World Bank report said India was one of the fastest-growing economies in the world despite significant challenges remaining in the global environment. The highlight of the report is that India has recorded a jump of 23 positions, to be ranked at 77 among 190 countries assessed by the World Bank. India has improved its score in 6 out of 10 indicators, moving closer to international best practice on 7 out of 10. If you are preparing for Government Job Exams, then it is very important for you to read the Daily Current Affairs. All the important updates based on current affairs are included in this Daily Current Affairs 2023 article.
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The World Bank, in its latest India Development Update report said the country’s growth is expected to be constrained by slower consumption growth and challenging external conditions. “Rising borrowing costs and slower income growth will weigh on private consumption growth, and government consumption is projected to grow at a slower pace due to the withdrawal of pandemic-related fiscal support measures,” it said. Experts expect the Monetary Policy Committee of the Reserve Bank of India , which is holding its bi-monthly meeting from April 3-6 to raise policy rates for the seventh time to tame inflation, which remains over the central bank’s upper tolerance limit of 6%. A recent spike in international crude oil prices is one of the major worries for experts as India is a net importer of energy. Growth is expected to be constrained by slower consumption growth and challenging external conditions.
Despite this slowdown in Q3, in terms of fiscal year-to-date (April-December), real GDP growth was bolstered by a favorable base effect and remained robust at 7.7 percent y-o-y. Elevated inflation, rising fiscal and current account deficit , a slowdown in exports and low-income growth are some of the key challenges that India needs to tackle in the upcoming financial year. The World Bank noted that India’s goods trade deficit has more than doubled since 2019, while CAD stands at a nine-year-high at 4.4 per cent of the GDP.
“Rising borrowing costs and slower income growth will weigh on private consumption growth,” the World Bank said in a report. Although headline inflation is elevated, it is projected to decline to an average of 5.2% in FY24, amid easing global commodity prices and some moderation in domestic demand. The Reserve Bank of India’s monetary policy committee had hiked the key repo rate to 6.50% in February to tame rising inflation. Rising borrowing costs and slower income growth will weigh on private consumption growth, says World Bank. While the global economic growth prospects saw a slight increase of 0.4 percent to 2.3 percent compared to the January projections, Shantanu Mukherjee, the Economic Analysis and Policy Division director, warned that a “sombre” outlook persists.
India’s GDP growth likely to moderate to 6.3% in FY24, says latest World Bank report
Development of a Communication Plan for Dissemination of reforms to users and other stakeholders, to generate awareness and receive feedback. Despite the challenges and possibility of a marginal slowdown in growth, India is much better placed to weather the economic crisis that has battered its neighbouring nations and triggered panic among western nations. The world’s second-biggest economy is now expected to grow 5.6% in 2023, up from 3% last year. The World Bank upgraded its 2023 outlook for China after Beijing late last year relaxed its draconian zero-COVID policies, which had restricted travel and hammered its economy. Note that the first advanced estimates also do not include the Q3 GDP data – which is published at the end of February as part of the second advance estimates. Rajan’s FY24 GDP projections are even gloomier than the World Bank and the International Monetary Fund . Former RBI governor Raghuram Rajan, in conversation with Congress leader Rahul Gandhi, had said that FY24 is going to be a much tougher year for the economy than this fiscal.
India’s real GDP growth is expected to be at 6.9 per cent in FY22-23 compared to 8.7 per cent in FY21-22, according to World Bank’s latest India Development Update. All steps taken over the past 10 years are helping India navigate the global headwinds,” Sharma, senior economist techshala at the World Bank said. The leap of 23 ranks in the ranking this year is particularly significant considering that only last year India had improved its rank by 30 places. Overall, in the last two years, India has improved its rank by 53 positions and 65 positions since 2014.
The eurozone, which represents the 20 countries that share the euro currency, is expected to post collective growth of 0.4% this year. The United States has continued to generate unexpectedly robust job gains ’employers added 339,000 workers in May, far more than economists had forecast’ even though the Fed has raised its benchmark rate 10 times in the past 15 months. Still, the bank’s latest Global Economic Prospects report, which it issued Tuesday, marks an upgrade from its previous forecast in January. In its latest estimates released on January 6, the World Bank said that India may grow at 7% in FY23, which is higher than the projections made by the RBI and the World Bank. The RBI and the World Bank have projected 6.8% and 6.9% GDP growth, respectively, in FY23.
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The US growth projection increased by 0.7 percent to 1.1 percent, while the European Union’s projection rose by 0.7 percent to 0.9 percent. The World Bank on Tuesday said it has lowered its forecast for India’s economic growth in the current fiscal year that started on April 1 to 6.3% from 6.6%. Some economists, however, have warned that the global slowdown and volatility in financial markets pose a risk to exports and the growth outlook in coming quarters. Moreover, it said, faster than expected inflation due to higher food or fuel prices may weigh on domestic demand. “India’s financial sector also remains strong, buoyed by improvements in asset quality and robust private-sector credit growth,” says the World Bank. Data released by the National Statistical Office last week showed the GDP growth of 6.1 per cent in the March quarter and 7.2 per cent in FY23, beating analysts’ expectations.