The World Bank recently released its June 2024 Global Economic Prospects, in which it forecasts India to remain the fastest-growing major economy, expecting an average annual growth rate of 6.7% from FY25 to FY27.

• The World Bank has revised India’s upward growth projections by 0.2 percentage points for FY25 and FY26, now forecasting growth rates of 6.6% and 6.7%, respectively. 
  • This update reflects an improvement in the economic outlook compared to earlier estimates.

About Global Economic Prospects Report

• This report was released by the World Bank. 
• It analyzes current global economic trends and future outlook.

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Key Highlights of India’s Economic Growth Forecast- 2023-2027

• Strong Growth Outlook:  
  • India’s economic growth is projected to reach 8.2% in 2023-24, which is 1.9 percentage points higher than the World Bank estimated in January.
  • Moderation In India’s Growth:  The World Bank anticipates a moderation in India’s growth rate to an average of 6.7% annually from FY25 to FY27. 
    • This slowdown is attributed to reduced investment following a period of high growth.
• Factors Driving Growth:
  • Investment Growth will likely remain robust, supported by strong public and private sector investments. 
    • Public investment will be particularly significant.
  • Private Consumption is set to benefit from improved agricultural production and decreasing inflation rates.
  • Government Expenditure is projected to grow slowly as part of reducing current spending relative to GDP.
• Global Economic Outlook:
  • Economic Stabilization: Globally, economic growth is forecasted to stabilize at 2.6% this year, marking the first time in three years despite geopolitical tensions and high interest rates.
    • Growth is expected to slightly increase to 2.7% in 2025-26, driven by modest gains in trade and investment.
  • Inflation worldwide: Moderate inflation is possible worldwide, though at a slower pace than previously assumed, averaging 3.5% this year.
• South Asia’s Economic Scenario: Growth in the South Asia region, primarily led by India, is projected to slow to 6.2% in 2024 and maintain this rate in 2025-26. 
  • This reflects steady economic expansion aligned with the region’s potential growth, albeit weaker than pre-pandemic levels.

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