India to remain fastest-growing major economy with steady growth of 6.7% in next 3 years: World Bank

Expressing optimism over the India’s growth prospects, the World Bank in its latest Global Economic Prospects report has stated that the country will remain the fastest-growing major economy recording a steady growth of 6.7 per cent in the next three years including the current financial year. As per the report, in India, growth is estimated to have picked up to 8.2 per cent in fiscal year (FY) 2023/24 (April 2023 to March 2024) - 1.9 percentage points higher than estimated in January. It further said global growth is projected to hold steady at 2.6 per cent in 2024 before edging up to an average of 2.7 per cent in 2025-26. That is well below the 3.1 per cent average in the decade before COVID-19.

It noted ‘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 would still be growing more slowly than they did in the decade before COVID-19’. Growth in the South Asia (SAR) region is projected to slow from 6.6 per cent in 2023 to 6.2 per cent in 2024, mainly due to a moderation of growth in India from a high base in recent years. With steady growth in India, regional growth is forecast to stay at 6.2 per cent in 2025-26. Among the region’s other economies, growth is expected to remain robust in Bangladesh, though at a slower rate than in the past several years, and to strengthen in Pakistan and Sri Lanka.

The report said ‘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’. This moderation is mainly due to a slowdown in investment from a high base. However, investment growth is still expected to be stronger than previously envisaged and remain robust over the forecast period, with strong public investment accompanied by private investment. It further said that private consumption growth is expected to benefit from a recovery of agricultural production and declining inflation.

It added government consumption is projected to grow only slowly, in line with the government’s aim of reducing current expenditure relative to GDP. According to the report, global inflation is expected to moderate to 3.5 per cent in 2024 and 2.9 per cent in 2025, but the pace of decline is slower than was projected just six months ago. Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades - averaging about 4 per cent over 2025-26, roughly double the 2000-19 average. In India, World Bank said inflation has remained within the Reserve Bank’s target range of 2 to 6 per cent since September 2023.