India's economic growth is expected to pick up speed from 6.8% in 2016 to 7.2% by 2017 after a modest setback due to weaker than expected investments and effects of withdrawal of large denomination bank notes, a World Bank report said on Sunday.
It said growth is expected to further gather momentum by 2019 when the Indian economy is expected to expand by 7.7%. Several multilateral agencies have raised India's growth prospects as the impact of demonetisation has waned.
"Timely and smooth implementation of the GST could prove to a significant benefit to economic activity However, India faces the challenge of further accelerating the responsiveness of poverty reduction to growth," the report said.
It also said possible protectionism in advanced economies should not deter export-oriented growth in South Asia, including India, a region that could benefit from the backlash against globalisation.
The report also confirms that South Asia remains the fastest-growing region in the world, gradually widening its lead relative to East Asia. Regional GDP growth is expected to rise from 6.7% in 2016 to 6.8% in 2017, and 7.1% in 2018.
It claims that global integration has been good for economic development and poverty reduction, but finds that the region would be resilient to higher trade barriers in advanced economies.
The report says that the region would even stand to gain if selective protectionism resulted in trade diversion from established suppliers. South Asian economies also stand to gain from the recovery in advanced economies, which are their largest export markets.
"Simulations on the impact of hypothetical new trade barriers show that South Asia is not only resilient to a potential rise in protectionism but could possibly even gain from it in some circumstances," said Annette Dixon, the World Bank South Asia Region vice-president.
"Advanced economies are recovering and could see faster growth that will likely increase demand for South Asian products. The region should seize this opportunity to diversify its exports and enhance its supply response. This could create a substantial number of jobs for new entrants to the labour force." – TOI