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HomeIndia NewsWorld Bank says India will remain fastest-growing major economy

World Bank says India will remain fastest-growing major economy

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The World Bank Report has predicted that India will remain the fastest-growing major economy with a steady growth rate of 6.7 per cent.

The growth is estimated to have picked up to 8.2 per cent in fiscal year (FY) 2023-24 and 1.9 per cent points higher than January, according to the World Bank’s  latest Global Economic Prospects report.

It also mentioned that global growth is expected to remain steady at 2.6 percent in 2024, before increasing slightly to an average of 2.7 percent in 2025–26. This is significantly lower than the 3.1 percent average seen in the decade preceding COVID-19.

“The forecast implies that over the course of 2024-26 countries that collectively account for more than 80 per cent of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19,” it said.

Growth in the South Asia region (SAR) is expected to decline from 6.6 percent in 2023 to 6.2 percent in 2024, primarily due to a slowdown in India’s growth from its recent high levels. With consistent growth in India, the region’s growth is projected to remain at 6.2 percent in 2025-26.

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Among other economies in the region, Bangladesh is anticipated to maintain robust growth, albeit at a slower pace than in previous years, while growth is expected to improve in Pakistan and Sri Lanka.

“India will remain the fastest-growing of the world’s largest economies, although its pace of expansion is expected to moderate. After a high growth rate in FY2023/24, steady growth of 6.7 per cent per year, on average, is projected for the three fiscal years beginning in FY2024/25,” the report said.

This moderation is mainly due to a slowdown in investment from a high base.

“However, investment growth is still expected to be stronger than previously envisaged and remain robust over the forecast period, with strong public investment accompanied by private investment,” it said.   It further said that private consumption growth is expected to benefit from a recovery of agricultural production and declining inflation.

Government consumption is projected to grow only slowly, in line with the government’s aim of reducing current expenditure relative to GDP, it added.   According to the report, global inflation is expected to moderate to 3.5 per cent in 2024 and 2.9 per cent in 2025, but the pace of decline is slower than was projected just six months ago.

Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades — averaging about 4 per cent over 2025-26, roughly double the 2000-19 average, it said.

In India, World Bank said inflation has remained within the Reserve Bank’s target range of 2 to 6 per cent since September 2023. However, apart from India, regional inflation, though below peak levels, has remained elevated, reflecting persistently high food price inflation from local food supply disruptions, and increased energy prices.

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