India's growth rate would further moderate to 4% in 2009 as against the previous estimation of 5.8%, said the World Bank in its new Global Economic Prospects (GEP) update released on the eve of the Group of Twenty (G-20) Summit in London.
Last November, the Bank had projected India’s growth rate to 5.8% but now viewing the worsening recession and the rising impact of global meltdown, it has predicted a slower growth rate.
Also for the year 2010, it has revised its previous projection of 7.7% to 7% if the growth rate could pick up the speed by the end of 2009.
Sketching out a shrinking economic picture for the whole world, the World Bank president Robert Zoellick said that the world would face first output growth declination since World War II.
The global growth is likely to decline by 1.7% this year, in which Organization for Economic Cooperation and Development (OECD) countries – a group of 30 member countries who discuss and develop economic and social policy – are expected to contract by 3% while other high income economies are expected to decline by 2%.
The GDP growth in the developing world will slow to a projected 2.1 percent in 2009 from 5.8 percent in 2008. If the growth rate of India and China were scraped from the developing world, there would be a complete halt in GDP growth before slowly recovering to 2.67% in 2010.
Earlier, the World Bank had estimated the growth rate of the developing world without India and China at 2.9% in 2009 and expected to pick up the speed to 4.7% in 2010. This gloomier picture of WB is reflecting the rapid deterioration of global financial and economic conditions.
For South Asia, the Bank too projected a reduced growth rate of 3.7% for 2009 in comparison to its previous estimation of 5.4% while for 2010 its projection is 6.2% as against its previous estimation of 7.2%. Last year the projected growth rate was at 5.6%.
World Bank analysis shows that the global economic crisis has hurt the poor of entire world in which many of them are already hit hard by the food and fuel crises. The pace of poverty reduction has moderated and in 2009, nearby 65 million people would expectedly remain under $2 a day, a well below the poverty line due to economic turmoil.
“Conditions of recession are affecting the world’s poorest people, making them more vulnerable than ever to sudden shocks; but also reducing the opportunities available to them, and frustrating their hopes,” said Justin Yifu Lin, World Bank Chief Economist and Senior Vice President, Development Economics by adding that this could reverse years of progress, and was nothing less than an emergency for development.
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