According to the latest World Bank figures, there is a possibility that India with a 7.5% projected growth rate may officially surpass China’s rate of growth. Among all the major emerging economies in the world, India as of now is leading the growth chart.
After releasing the latest Global Economic Prospects (GEP) report on Wednesday, Kaushik Basu, World Bank Chief Economist and Senior Vice President said, “With an expected growth of 7.5 per cent this year, India is, for the first time, leading the World Bank’s growth chart of major economies,”.
Focusing on China, India’s contender and Asia’s major economic power, the report said that China is projected to grow at the rate of 7.1 per cent. Developing countries are now projected to grow by 4.4 per cent this year, with a likely rise to 5.2 per cent in 2016, and 5.4 per cent in 2017.
The report highlighted that while the carefully managed slowdown continued in China, the growth figures were likely to touch a healthy 7.1 per cent this year. Whereas in India, which is an oil importer, reforms have buoyed confidence and falling oil prices have reduced the possible vulnerabilities, paving the way for the economy to grow at a robust 7.5 per cent rate in 2015.
“China has avoided the potholes skilfully for now and is easing to a growth rate of 7.1 per cent; Brazil, with its corruption scandal making news, has been less lucky, dipping into negative growth,” Mr. Basu said.
He further stressed that the ground beneath the global economy is shifting. The main shadow over this moving landscape is of the eventual US liftoff.
Growth in South Asia is expected to continue firming to 7.1 per cent this year, led by a cyclical recovery in India and supported by a gradual strengthening of demand in high-income countries.
The decline in global oil prices has been a major benefit for the region, driving improvements in fiscal and current accounts, enabling subsidy reforms in some countries, and the easing of monetary policy, the report further said.
The report emphatically stressed that in India, new reforms are improving business and investor confidence and attracting new capital inflows, and should help raise growth to 7.5 per cent this year.
The report also highlighted that the developing nations are going to face a series of tough challenges in 2015, including the looming prospect of higher borrowing costs as they adapt to a new era of low prices for oil and other key commodities.
“Developing countries were an engine of global growth following the financial crisis, but now they face a more difficult economic environment,” said World Bank Group President Jim Yong Kim.
The World Bank is an international financial organization created with the purpose to provide finance and technical assistance to the developing countries. Besides this, it plays a major role in overseeing economic policy and supervising the global macroeconomic agenda.