New Delhi. The World Bank said in a report on Tuesday that India will remain the fastest growing major economy, registering a stable growth of 6.7 percent in the next three years. According to the World Bank’s latest ‘Global Economic Prospects Report’, economic growth in India is expected to increase to 8.2 percent in the financial year 2023-24. This is 1.9 percent more than the previous estimate of the World Bank in January.
Along with this, the World Bank projected global economic growth to remain stable at 2.6 percent in the year 2024. It said that global growth will increase to an average of 2.7 percent in the next two years. However, this will also be much less than the 3.1 percent of the decade before Covid-19.
According to the report, “This forecast means that during 2024-26, countries with more than 80 percent of the world’s population and global GDP will be growing at a slower pace than in the decade before Kovid-19.” Growth in the South Asia region was 6.6 percent in the year 2023 and it is estimated to slow down to 6.2 percent in the year 2024. The main reason behind this slowdown will be the slowdown in India’s growth rate from a high base in recent years.
However, the World Bank expects the South Asia region to grow at 6.2 percent in 2025-26 with stable growth in India. Among other economies in the region, growth in Bangladesh may be slightly slower than in previous years, while it is expected to be strong in Pakistan and Sri Lanka.
The report says, “India will remain the fastest growing country among the world’s largest economies, but its expansion is likely to slow down. After high growth in FY 2023-24, stable growth is projected at an average of 6.7 percent per annum for the three fiscal years starting from 2024-25.” This slowdown is mainly attributed to the slowdown in investment from a high base. However, investment growth is still expected to be stronger than previously estimated and will remain strong over the forecast period, with private investment accompanied by strong public investment.
The report says that private consumption growth is expected to benefit from improved agricultural production and a decline in inflation. Government consumption is expected to grow slowly in line with the government’s target of reducing current expenditure relative to GDP. According to the report, global inflation is expected to decline to 3.5 percent in 2024 and 2.9 percent in 2025, but this pace is slower than the estimate six months ago. This may make many central banks cautious in reducing policy interest rates.
The World Bank said that inflation in India has remained within the Reserve Bank’s prescribed range of two to six percent since September 2023. However, regional inflation in the South Asia region, except India, remains high despite being below the high level.