South Asia Economic Focus: World bank cuts India growth forecast on Ukraine crisis

What is the News?

The World Bank has released its bi-annual report titled “South Asia Economic Focus”. The report analyzes the economic impact on South Asia of the war in Ukraine, presents growth forecasts and concludes that reshaping economies goes hand in hand with reshaping norms.

What are the key findings of the South Asia Economic Focus?

GDP Estimates: Economic growth in southern Asia will be slower than previously projected due to the impacts of the war in Ukraine.

Growth: It projects the region to grow by 6.6% in 2022 and by 6.3% in 2023. The 2022 forecast has been revised downward by a 1% point.

Gender Equality: The South Asian region lags in attitudes towards gender equality. Social norms are even more traditional than people’s individual attitudes.

Forecast on India: The World Bank has lowered India’s growth to 8% from the previous estimate of 8.7% for the current fiscal year 2022-23.

Why were India’s growth estimates lowered?

India’s growth estimates were reduced due to:

-Worsening supply chain and rising inflation risks caused by the Ukraine crisis.

-Household consumption is constrained by the incomplete recovery of the labour market from the pandemic and inflationary pressures.

-High oil and food prices caused by the war in Ukraine will have a strong negative impact on people’s real income.

What are the suggestions given by the report?

Firstly, Governments need to carefully plan monetary and fiscal policies to counter external shocks and protect the vulnerable.

Secondly, Countries need to implement interventions that tackle barriers to women’s economic participation, including norms that are biased against women.

Thirdly, countries should steer away from inefficient fuel subsidies that tend to benefit wealthier households and deplete public resources.

Lastly, countries should also accelerate the transition to a low-carbon development path and move towards a greener economy to reduce reliance on fuel imports.

Source: This post is based on the article “World bank cuts India growth forecast on Ukraine crisis” published in Indian Express on 13th April 2022.