India Fastest Growing Major Economy Despite Global Slowdown: World Bank

New Delhi: India is set to maintain its position as the fastest-growing major economy, with a projected steady growth of 6.7% over the next three years, including the current fiscal year, according to the latest World Bank report released on Tuesday. The report highlights India’s estimated growth rate of 8.2% in the fiscal year 2023/24, surpassing earlier forecasts by 1.9 percentage points.

However, global growth is expected to remain modest, with a projection of 2.6% in 2024, gradually increasing to an average of 2.7% in 2025-26. This growth trajectory falls short of the pre-COVID-19 decade average of 3.1%. The report indicates that despite this, countries representing over 80% of the world’s population and GDP would experience slower growth compared to the pre-pandemic era.

South Asia’s growth is projected to slow from 6.6% in 2023 to 6.2% in 2024, primarily due to India’s moderation. Bangladesh is expected to see robust but slower growth, while Pakistan and Sri Lanka are forecast to see strengthening economies.

India’s private consumption is expected to benefit from a rebound in agricultural production and declining inflation. Government spending is projected to grow slowly as the government aims to reduce expenditure relative to GDP.

Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but slower than previously anticipated. This may lead central banks to remain cautious about lowering interest rates, which are expected to stay high by historical standards, averaging 4% over 2025-26.

In India, inflation has remained within the Reserve Bank’s target range since September 2023. However, regional inflation excluding India remains elevated due to high food prices and rising energy costs.