World Bank on June 8 projected India's economy to grow at 8.3 per cent in 2021. Earlier, the World Bank had estimated Indian economy to grow at a pace of 10.1 percent in FY 2021-22.
Citing the reason to slash the FY22 growth of Indian economy, the global lending and monitoring body said that India has been hampered by the largest outbreak of coronavirus cases that any country has seen since the beginning of the pandemic.
Global economy expected to expand 5.6% in 2021, says World Bank
“In India, an enormous second covid-19 wave is undermining the sharper-than-expected rebound in activity seen during the second half of FY2020/21, especially in services. With surging covid-19 cases, foot traffic around work and retail spaces has again slowed to more than one-third below pre-pandemic levels since March, in part due to greater restrictions on mobility," World Bank said in its latest Global Economic Prospects report.
The World Bank even added in the FY22, economic activity in India will benefit from the policy support which include higher spending on infrastructure, rural development, and health, and a stronger-than expected recovery in services and manufacturing.
"Activity is expected to follow the same, yet less pronounced, collapse and recovery seen during the first wave. The pandemic will undermine consumption and investment as confidence remains depressed and balance sheets damaged. Growth in FY2022/23 is expected to slow to 7.5% reflecting lingering impacts of covid-19 on household, corporate and bank balance sheets; possibly low levels of consumer confidence; and heightened uncertainty on job and income prospects," the World Bank added.
The World Bank released its latest edition of Global Economic Prospects and expects that the global economy may expand 5.6 percent in 2021. However, it was of the the view that despite the recovery, global output will be about 2 percent below pre-pandemic projections by the end of this year.
Among other things, World Bank noted that among low-income economies, where vaccination has lagged, the effects of the pandemic have reversed poverty reduction gains and aggravated insecurity and other long-standing challenges.
"While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world,” World Bank Group President David Malpass said.
The World Bank expects US economy to reach 6.8 percent this year, reflecting large-scale fiscal support and the easing of pandemic restrictions. While anticipates China to rebound to 8.5 percent this year, reflecting the release of pent-up demand.
It added that excluding China, the rebound in the emerging market and developing economies as a group are forecast to expand 6 percent this year, however the rebound in this group of countries is anticipated to be a more modest 4.4 percent. The recovery among emerging market and developing economies is forecast to moderate to 4.7 percent in 2022, it said.