June 11th 2024.
New Delhi is set to maintain its position as the fastest-growing major economy, according to a World Bank report released on Tuesday. The report predicts a steady growth of 6.7 percent for India in the next three years, including the current financial year.
In fact, the report also states that India's growth is estimated to be even higher in the fiscal year 2023/24, reaching 8.2 percent. This is an impressive 1.9 percentage points higher than previously estimated in January. The report further mentions that global growth is expected to remain steady at 2.6 percent in 2024 before gradually increasing to an average of 2.7 percent in 2025-26. However, this is still lower than the pre-COVID-19 average of 3.1 percent.
According to the World Bank, this forecast means that in the years 2024-26, countries that make up more than 80 percent of the world's population and global GDP will still experience slower growth compared to the previous decade. The report also predicts a slight slowdown in growth for the South Asia region, from 6.6 percent in 2023 to 6.2 percent in 2024. This is mainly due to a decrease in India's growth rate from recent years.
Despite this, India is still expected to be the fastest-growing among the world's largest economies. The report projects a steady growth rate of 6.7 percent per year for the three fiscal years starting in 2024/25. However, this is a moderate pace compared to the high growth rate expected in 2023/24. The report attributes this moderation to a slowdown in investment, but notes that it will still be stronger than previously predicted.
The report also states that private consumption and government consumption are expected to contribute to growth. Private consumption is expected to benefit from a recovery in agricultural production and decreasing inflation, while government consumption is projected to grow slowly as the government aims to reduce current expenditure relative to GDP.
The report also mentions that global inflation is expected to decrease to 3.5 percent in 2024 and 2.9 percent in 2025, although this decline is slower than predicted six months ago. As a result, many central banks are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain higher than the average of the past two decades, at around 4 percent over 2025-26, according to the report.
In India, the World Bank notes that inflation has remained within the Reserve Bank's target range of 2 to 6 percent since September 2023. Overall, the report paints a positive picture for India's economy, with steady growth expected in the next few years.
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