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The World Bank has revised its growth projections for the US economy, now anticipating a 2.5% growth rate in 2024, consistent with 2023 but significantly higher than the earlier estimate of 1.6%.
In its June 11 report, the World Bank maintained its GDP growth forecast for India at 6.6% for FY25. This follows an earlier adjustment in April, where India’s GDP growth projection was raised by 20 basis points to 6.6% for the current financial year. The global agency highlighted that India will continue to be the fastest-growing major economy, despite a slight moderation in its growth pace. After achieving high growth in 2023-24, India is projected to maintain steady growth of 6.7% annually on average over the next three fiscal years starting in 2024-25.
Key projections for India:
- FY25 GDP Growth: 6.6%
- FY26 GDP Growth: 6.7%
- FY27 GDP Growth: 6.8%
India’s GDP growth exceeded expectations, standing at 7.8% in the January-March quarter, although it was slightly slower than the 8.4% growth in the previous quarter. The full-year GDP growth for 2023-24 has been revised upwards to 8.2% from the second advance estimate of 7.6%, according to data from the Ministry of Statistics and Programme Implementation released on May 31.
The Reserve Bank of India anticipates a 7.2% growth rate for FY25.
Global economic outlook:
- Global GDP growth: 2.6% for 2024-25, 20 basis points higher than the January estimate
- FY26 & FY27 growth: Expected at 2.7%
The World Bank’s June 2024 Global Economic Prospects report indicates that global growth will stabilize at 2.6% this year, remaining steady for the first time in three years despite geopolitical tensions and high interest rates. Growth is projected to increase slightly to 2.7% in 2025-26, driven by modest improvements in trade and investment.
South Asia Region (SAR) forecast:
- 2024 GDP growth: 6.2%, down from 6.6% in 2023 due to India’s slower growth
- 2025-26 GDP growth: Expected to remain at 6.2%
Despite steady growth in India, the SAR region’s growth is expected to stay at 6.2% in 2025-26. Bangladesh’s growth will remain robust but slower than in recent years, while Pakistan and Sri Lanka are projected to strengthen. However, risks such as commodity market disruptions, fiscal consolidations, financial instability, severe weather events, and slower-than-expected growth in China and Europe pose significant threats to this outlook.
Inflation and Monetary policy:
- Global inflation: Expected to moderate, averaging 3.5% this year
- Central Bank policies: Likely to remain cautious, keeping interest rates about double the 2000-19 average
The World Bank notes that geopolitical tensions and trade fragmentation could disrupt global trade networks, with inflation persistence potentially delaying monetary easing. Conversely, quicker-than-expected global disinflation and stronger US economic performance are potential upside risks.