NEW DELHI: India will remain the fastest-growing major economy, recording a steady growth of 6.7 per cent in the next three years, encompassing the ongoing fiscal year, stated a World Bank report on Tuesday.
According to the most recent Global Economic Prospects report by the World Bank, India’s growth is projected to have accelerated to 8.2 per cent in fiscal year (FY) 2023–24 (April 2023–March 2024). This estimate is 1.9 percentage points higher than the previous estimation made in January.
Global growth is projected to remain stable at 2.6 per cent in 2024, gradually increasing to an average of 2.7 percent in 2025–26. This figure falls significantly short of the pre-Covid-19 decade’s average of 3.1 percent, it stated.
The South Asia (SAR) region is expected to experience a deceleration in growth, with a projected decrease from 6.6 percent in 2023 to 6.2 percent in 2024. This slowdown can be primarily attributed to a moderation in India’s growth, which has been operating from a strong foundation in the past few years
World Bank
“The forecast implies that over the course of 2024–26, countries that collectively account for more than 80 per cent of the world’s population and global GDP will still be growing more slowly than they did in the decade before COVID-19,” it said.
The South Asia (SAR) region is expected to experience a deceleration in growth, with a projected decrease from 6.6 percent in 2023 to 6.2 percent in 2024. This slowdown can be primarily attributed to a moderation in India’s growth, which has been operating from a strong foundation in the past few years, according to the report.
India is projected to experience consistent growth, with regional growth expected to reach 6.2 per cent in 2025–26. Among the region’s other economies, Bangladesh is anticipated to maintain strong growth, albeit at a slightly slower pace compared to previous years, while Pakistan and Sri Lanka are forecasted to see an increase in economic growth, it stated.
“India will remain the fastest-growing of the world’s largest economies, although its pace of expansion is expected to moderate. After a high growth rate in FY2023/24, steady growth of 6.7 per cent per year, on average, is projected for the three fiscal years beginning in FY2024/25,” the report stated.
The moderation primarily stems from a deceleration in investment from a substantial starting point. Nevertheless, the growth in investment is anticipated to be more robust than previously projected and maintain its resilience throughout the projected timeframe, supported by vigorous public and private investment.
The report also mentioned that private consumption growth is anticipated to receive a boost from the recovery of agricultural production and decreasing inflation. On the other hand, government consumption is forecast to increase at a gradual pace, aligning with the government’s goal of decreasing current expenditure compared to GDP.
The report indicates that global inflation is projected to ease to 3.5 percent in 2024 and 2.9 percent in 2025. However, it is worth noting that the rate of decline is slower compared to the projections made six months ago.
Numerous central banks are anticipated to exercise caution when it comes to reducing policy interest rates. It is projected that global interest rates will continue to be relatively high compared to previous decades, with an average of around 4 per cent during the years 2025–26. This is approximately twice the average seen between 2000 and 2019.
The World Bank reported that inflation in India has stayed within the Reserve Bank’s target range of 2 to 6 percent since September 2023. However, with the exception of India, inflation at the regional level has continued to be high, albeit lower than its peak levels. This can be attributed to the ongoing food price inflation caused by disruptions in the local food supply and the rise in energy prices.
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