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World Bank pegs South Asia GDP at 5.4%
September 03, 2003 23:30 IST
Coinciding with Reserve Bank's projection that India's GDP growth will be "significantly" more than 6.0 per cent, the World Bank too, on Wednesday, forecast a higher growth for the Indian economy this fiscal but warned that unchecked fiscal deficit may spoil the prospects of attaining the Tenth Plan target of 8.0 per cent.
"If the Tenth Plan target is to be achieved, a large number of areas will have to be addressed," World Bank country director, Michael S Carter, said while releasing the report 'Global Economic Prospects 2004' on Wednesday.
World Bank pegged the combined GDP growth of India and other South Asian nations at 5.4 per cent this year compared to 4.2 per cent in 2002 and 4.9 per cent in 2001.
Like RBI, the World Bank also avoided giving any specific figure for India's GDP growth for 2003-04.
"Growth is expected to accelerate to 5.4 per cent in 2003 in South Asia, assuming a return to normal agricultural production, a recovery in external demand and continued improvements in political stability and regional security," World Bank senior economist Dominique van der Mensbrugghe said.
The higher growth would be possible due to better performance of Indian economy, which contribute 80 per cent of the total production of the South Asia region.
Last year, growth in South Asia was at 4.2 per cent mainly on account of the drastic fall in India's GDP growth to 4.4 per cent.
"Apart from a recovery in agriculture output, growth in India is likely to be supported by continued strong expansion in services sector especially IT," the report said.
Macro-economic stability and undergoing reforms are expected to benefit Pakistan, Bangladesh, Sri Lanka and Nepal, it said.
While hiking the GDP growth target for South Asia for this year, the World Bank kept the growth projection static at 5.4 per cent for the next two years.
This is still higher than 5.2 per cent posted by the region during the last decade.
South Asian nations growth forecast could prove optimistic in the presence of large fiscal deficits, regional political tensions, severe weather conditions and uncertainties surrounding the recovery of the world economy, the bank said.
"Recent steps towards improving relations between India and Pakistan may lead to greater stability in the region, paving way for increased business confidence and stability," it said.
Growth in exports and decline in oil prices would benefit the region. India and Pakistan projected current account surplus would offset the deficits in other nations in the region, the bank said.