World Bank Projects 7% Economic Growth For India - June 11, 2008

The World Bank witnesses India''s economic growth to distinctly slow further to seven per cent in 2008, following an easing in its gross domestic product (GDP) growth to a still strong 8.7 per cent in 2007 from nine per cent in 2006. In its flagship annual publication Global Development Finance, 2008, released in Cape Town, South Africa on June 10, the Bank said beginning this year, inflationary pressures started to build in India with deceleration in industrial output to three per cent in April 2008, indicating growing signs of a cooling economy. But a falloff in growth in countries where migrants are employed, coupled with the sharp depreciation of the dollar, could lead to lower remittance inflows in local currency terms, the Bank said adding that this could lead to weaker consumer demand.

Volatile and declining equity prices in the region, particularly in India - just as ownership of stocks and other financial assets is beginning to take hold among the burgeoning middle-class could hamper both consumer and business outlays, while depressing overall confidence levels in the economy. It called upon countries particularly active in global interbank markets Brazil, China, Hungary, India, Kazakhstan, Russia, South Africa, Turkey and Ukraine to be concerned about the possibility that their domestic banks would face funding difficulties in international markets, should liquidity pressures in interbank markets remain at elevated levels.