“India is also anticipated to grow relatively more modestly in 2020-24 than in 2013-17 while the banking sector regains its footing,” it said in its Economic Outlook for Southeast Asia, China and India 2020 presented at the Association of Southeast Asian Nations (ASEAN) summit in Bangkok.
While reliance on consumption will continue, the large informal labour share indicates that there is room to strengthen the consumption base.
“Sustaining efforts to prop up the health of the banking sector is a vital challenge, while bridging the disparity in urban and rural infrastructure is important for spreading investment and economic opportunities while addressing urbanisation,” it said.
The organisation has predicted a regional GDP growth of 5.7% over 2020-24, down from 6.7% in 2013-17.
As per the report, China would need to bridge the gap between demand and supply of digital talent, while improving digital literacy and increasing access to digital devices are critical in India.
Trade tensions between the United States and China are continuing, and the broadening economic weakness in advanced economies adds substantial uncertainty to export prospects.
Stability in the labour market, and in certain cases inflows of income from overseas workers, will sustain domestic consumption. Realisation of infrastructure projects that are already in the pipeline should provide more lift to domestic demand.