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Impact of economic slowdown; India's GDP growth rate may be less than Nepal and Bangladesh!

Monday - October 14, 2019 11:40 am , Category : WTN SPECIAL
Economic slowdown overshadowing India's GDP growth rate
Economic slowdown overshadowing India's GDP growth rate

Many financial institutions including the World Bank estimated India's GDP
growth rate low


OCT 14 (WTN) - Due to the global economic slowdown, the economy of a fast-growing country like India has been facing a lot of negative impacts. The biggest impact of the economic slowdown has been seen from the auto sector to the textile sector. Due to the open economy, the economic recession has affected the economies of countries all over the world, due to which the estimate of the GDP growth rate of the current financial year has been reduced for many countries. The economic slowdown has also hurt India's GDP growth rate, one of the fastest-growing economies. But despite this, GDP growth rates of small countries like Nepal and Bangladesh are estimated to be higher than in India.

First of all, let us tell you that the Central Bank of India, Reserve Bank of India has also reduced the GDP growth rate estimate for the current financial year. In such a situation, now the World Bank has also reduced the estimate of India's growth rate in the current financial year. According to the World Bank, India’s growth rate in the current financial year may be reduced to 6 per cent. For your information, let us know that India's growth rate for the financial year 2018-19 was 6.9 per cent. Before the World Bank, Moody's Investors Service also lowered India's GDP growth estimate for the fiscal year 2019-20 from 6.20 per cent to 5.80 per cent. Regarding its decision to reduce the GDP growth rate, Moody's says that the Indian economy is heavily affected by the economic slowdown and some of its factors are long-term effects. Talk about the Reserve Bank of India, it has lowered the GDP growth rate to 6.10 per cent after the recent monetary policy review meeting (MPC).

However, in the new edition of the South Asia Economic Focus, the World Bank says that India's GDP growth rate will perform well in the year 2021 and once again it can achieve the level of 6.9 per cent. Not only this, it is estimated that India's GDP growth rate in the year 2022 can be 7.2 per cent. The World Bank says that India's GDP growth rate is not achieving the projected target for the second consecutive fiscal year.

For your information, let us know that India's growth rate was 7.2 per cent in the financial year 2017-18, which has come down to 6.8 per cent in the year 2018-19. However, industrial output growth increased to 6.9 per cent as manufacturing and construction activities increased, while the agriculture sector growth rate was 2.9 per cent and the services sector growth rate was 7.5 per cent.

Here, about India's GDP growth rate, Moody's says that the economic slowdown is currently impacting the growth rate. But after the effects of the economic slowdown diminish and end, India's GDP growth rate can be up to 6.6 per cent in FY 2020-21.According to Moody's, the real growth and inflation of GDP is expected to slow down in the next two years. Therefore the forecast for growth rate and the inflation rate has been reduced. According to Moody's, the GDP growth rate is expected to be 8 per cent or more, when compared to the situation two years ago.

After the World Bank, the Reserve Bank of India and Moody's, the Asian Development Bank (ADB) and the OECD also lowered India's GDP growth estimate. At the same time, rating agencies Standard & Poor's and Fitch have also cut GDP growth forecasts. That is it is clear that due to the economic downturn, India's GDP growth rate is being significantly affected.

But while the economic slowdown is directly impacting India's growth rate, the GDP growth rate of small countries like Nepal and Bangladesh is going to be higher than that of a large economy country like India. Despite the economic downturn in Bangladesh, a country of the much smaller economy than India's economy, GDP growth has been estimated at 8.1 per cent.

For your information, let us know that Bangladesh's GDP growth rate in 2018-19 was 7.9 per cent. At the same time, it has been estimated to be 7.2 per cent in the year 2020 and 7.3 per cent in the year 2021. This is why, because due to the ongoing trade war between the US and China, the Garments Industry of Bangladesh has benefited a lot. According to international trade experts, Bangladesh has performed and is doing better in the midst of the economic downturn compared to India, Pakistan and Sri Lanka.
This success at the economic level of Bangladesh is visible in the data from industrial production to export.

At the same time, the buffer state between India and China i.e. Nepal's GDP growth rate is also estimated to be higher than India. Nepal's GDP growth is estimated to be 6.5 per cent in the current financial year and the next financial year. Now you must be wondering how the GDP growth rate of a small country like Nepal is going to be higher than India? So for your information, let us know that along with the increase in service and construction activities in Nepal, tourism and public spending have increased, due to which the GDP growth of Nepal is estimated to be accelerating. According to the World Bank report, this time the growth in South Asia will be 5.9 per cent, which is 1.1 per cent less than in April 2019. The economic downturn has also affected imports in South Asia, and Pakistan and Sri Lanka have been the worst hit, with a 15 to 20 per cent reduction in total imports. In fact, due to industrial production, a decrease in imports and financial market troubles, the South Asian market is seeing an economic slowdown.

It can be said that the economic slowdown in South Asian countries is seen repeating the years 2008 and 2012. However, a slight spurt in investment and private consumption is also said to boost the economic boom for South Asian countries to 6.3 per cent during 2020. It is clear that the recession has affected the economy of India that the economy of Bangladesh and Nepal will grow faster than the economy of India which is among the top economies of the world.