Economy to Grow Faster; Exports Challenging: World Bank, Indian Economy Growth in 2011, Indian Economy Expected to Grow 9 Percent in 2011, South Asian Economy Growth in 2011

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SME Times News Bureau | 08 Jun, 2010
Indian economy is expected to make huge strides in 2011 growing at a pace of 9 percent with South Asia poised to grow a little slower, but the shoots of recovery for the export sector of the whole region may not be strong enough, the World Bank has said.

According to the World Bank's first yearly assessment of the economies of the region released in Colombo on Monday, India's economy is expected to grow at 9 percent in 2011 while the South Asian economy, as a whole, at 8 percent to become the second-fastest growing region after East Asia & Pacific during the year.

However, the report expresses concern that there remain some significant risks in the global environment - slowing worker remittances and exports in a still hesitant and uncertain global recovery, as recent events in Europe show, with volatile commodity prices, and continuing volatility in global capital flows.

"Improved optimism is helping drive the recovery in private spending in India, Bangladesh, Bhutan and Sri Lanka. India's growth is expected to rise to 9 percent in 2011, Bangladesh to 6.4 percent, Bhutan to 7 percent, and Sri Lanka to above 6 percent," it adds.

According to the World Bank, growth for the South Asian economy during the current fiscal will be nearly 7 percent .

The report noted that the drop in growth during the global economic crisis was the smallest among all regions, adding that the South Asian region will benefit from new engines of growth and adapting to a "new normal" as emerging markets and Asia drive global growth.

Trade with East Asia and China could potentially triple to reach $450 billion per year while high-income markets will continue to be important for South Asia, even if at a slower pace than in the past, other emerging markets and regions are also fast-growing and increasingly important partners, the report states.

"The Regional Economic Update expects growth in the region to reach close to pre-crisis peak levels and faster than its high rates of 6.5 percent annually from 2000 to 2007," said Dipak Dasgupta, lead economist and principal author of the report.

"Rising domestic confidence combined with government fiscal and monetary stimulus packages and, in some cases, external assistance is helping stimulate recovery" views the World Bank.

"Over the past fifteen years the region has become much more open-and it appears that the form of openness it has chosen has provided resilience in the face of recent shocks," said Andrew Steer, World Bank Acting Chief Economist for the South Asia Region.

Contrary to current beliefs, South Asia's particular strengths and forms of global integration-not the lack of it-was a key factor behind its resilience following the financial crisis of 2008, the World Bank report says.