The World Bank has revised its forecast for Indian gross domestic product (GDP) growth for the fiscal year 2024-25 to 6.6 per cent in its latest Global Economic Prospects, released in June 2024 report.
Key Findings of the Report
Global
- Growth Outlook: According to the report, for the first time in three years, the global economy is showing signs of stabilisation in 2024.
- Globally, GDP growth is now anticipated to be 2.6 % for 2024-25. For FY26 and FY27, global growth is expected to be 2.7% amid modest growth in trade and investment.
- Projection for Global Inflation: The World Bank forecasts a slower moderation of global inflation, averaging 3.5% this year.
- Central banks in advanced and emerging market economies are expected to be cautious about easing monetary policy due to ongoing inflationary pressures.
- Challenges to Global Growth: The global outlook remains subdued due to factors such as geopolitical tensions, trade fragmentation, higher interest rates, and climate-related disasters, despite some near-term improvements.
- It also emphasises the need for global cooperation to safeguard trade, support green and digital transitions, provide debt relief, and enhance food security.
South Asian Region (SAR)
- Growth Outlook: In the South Asia region, GDP growth is projected to decrease from 6.6 % in 2023 to 6.2 % in 2024, largely due to a slowdown in India from its high growth rates in recent years.
- Other economies such as Bangladesh, are expected to maintain robust growth, though at a slower pace.
- Pakistan and Sri Lanka are expected to see strengthened economic activities.
- Poverty Reduction: The report noted that per capita income growth in the South Asian region is expected to decrease from 5.6% in 2023 to 5.1% in 2024-25, then slightly rise to 5.2% in 2026.
- This slower pace is due to weaker-than-expected growth in private consumption and fiscal adjustments that may reduce household income.
India
- India’s Economic Trajectory: India, the largest economy in South Asia, has significantly contributed to regional growth.
- The country’s growth rate for FY24 is estimated at 8.2 %, driven by its industrial and services sectors, which have offset a slowdown in agricultural production caused by monsoon disruptions.
- Fiscal and Trade Balances: In India, the fiscal deficit relative to GDP is projected to decrease due to increased revenues from a broadened tax base.
- Trade deficits are narrowing, particularly in India, contributing to overall economic stability in the South Asian region.
India’s GDP Forecast by MOSPI and RBI
- According to the Ministry of Statistics and Programme Implementation (MOSPI) data, the GDP growth provisionally stands at 8.2% for the Financial Year 2023-24, as
- compared to the growth rate of 7.6% in FY23.
- The Reserve Bank of India raised India’s FY25 real GDP forecast to 7.20%.
World Bank
- It was created in 1944, as the International Bank for Reconstruction and Development (IBRD) along with the IMF. The IBRD later became the World Bank.
- The World Bank Group is a unique global partnership of five institutions working for sustainable solutions that reduce poverty and build shared prosperity in developing countries.
- The World Bank is one of the United Nations’s specialised agencies.
It has 189 member countries. India is also a member country