India’s economy has plunged to a “frightening” low, with the economy shrinking at a faster pace than the population, according to a new report.
India’s economy grew by 4.2% in the first quarter of this year, down from a growth of 8.9% in 2016.
That is the slowest growth since 2009, according the World Bank’s World Development Indicators (WDI).
In the three months to December, the economy contracted by 4% and by 5.6% in 2017, according TOI.
The report, compiled by economists from the Indian Statistical Institute (ISI), said that the slowdown was largely the result of a slowdown in infrastructure spending, which was fuelled by the country’s economic slowdown.
India is expected to become the biggest exporter of liquefied natural gas (LNG) this year and the fastest-growing LNG market in the world.
However, the slowdown in the economy and the shortage of gas have pushed down the cost of LNG imports, forcing the government to reduce the price.
In the same quarter, the country will need to import more than $1 trillion in natural gas in order to meet demand.
Inflation, however, has continued to rise, with consumer prices falling by 8% in December from a year earlier.
The World Bank says the country has seen the largest annual growth in inflation since the global financial crisis.
It said the slowdown is likely to continue and that the government needs to focus on reforms to revive the economy.
“It is likely that India will continue to see slower growth and an increasing reliance on energy-intensive sectors, particularly agriculture and manufacturing,” the report said.
“The lack of access to financial capital and a lack of a credible fiscal position may lead to further slowing in growth and inflation in the near term.”
“The situation could also worsen in the next few years as the economic recovery takes longer to start,” it said.
The International Monetary Fund said India is a “worrisome” country that has been “deeply troubled” by a “severe” economic slowdown and was in “anemic” financial health.
The IMF, however has warned that India could remain a “high-cost country” for global investment, despite the economic slowdown, and that there was still “no clear evidence” of a “sustained rebound” in the country.
The economic slowdown has led to a slowdown of the manufacturing sector, which accounts for almost one in three of the economy, according IMF.
In December, India’s manufacturing output was the lowest since the start of the global economic crisis.
The economy is currently projected to grow at 7.5% this year.
The global economy is expected grow by 4%, according to the World Economic Forum, with growth projected to slow to 7.2%.
The IMF also warned that a slowing of the world economy is also expected to have “an adverse impact on financial stability, which will likely lead to slower economic growth and slower economic expansion”.
The report highlighted that “low interest rates” and weak economic growth in China, Russia and India have all contributed to the slowdown.
“Low interest rates and high inflation have fuelled speculation and increased the risk of financial instability and credit default swaps,” the WDI said.
This has also had a “significant impact” on Indian and international bond markets.
India has been grappling with a deep economic slowdown that has led the country to slash its growth forecasts for the next three years and reduce spending on infrastructure.