Global growth forecast lifted to 2.1%
New Delhi, NFAPost: The World Bank has said India would remain the fastest-growing economy in terms of both aggregate and per capita gross domestic product (GDP) among the largest emerging market and developing economies. It retained India’s FY24 growth forecast at 6.3%.
“Greater than expected resilience in private consumption and investment, and a robust services sector in India, is supporting growth in 2023. Growth is projected to pick up slightly through FY26 as inflation moves back toward the midpoint of the tolerance range and reforms payoff,” the multilateral development bank said in its “Global Economic Prospects” report.
In its India Development Update released in April, the World Bank had revised its growth forecast for India by 30 basis points to 6.3% for FY24. The World Bank said India’s growth in early 2023 remained below what it achieved in the decade before the pandemic as higher prices and rising borrowing costs weighed on private consumption.
“However, manufacturing rebounded into 2023 after contracting in the second half of 2022, and investment growth remained buoyant as the government ramped up capital expenditure. Private investment was also likely boosted by increasing corporate profits. Unemployment fell to 6.8% in the first quarter of 2023, the lowest since the onset of the Covid-19 pandemic, and labour force participation increased.”
India’s headline consumer price inflation has returned to within the central bank’s 2-6 per cent tolerance band,” it added.
Data released by the National Statistical Office last week showed the GDP growth of 6.1% in the March quarter and 7.2% in FY23, beating analysts’ expectations. The robust GDP data and encouraging signs of high frequency indicators led to a spate of upward revisions in FY24 GDP growth forecasts by analysts. While SBI revised its growth projection for FY24 to 6.7% from 6.2%, JP Morgan revised it to 5.5% from 5% estimated earlier.
The World Bank said after growing 3.1 per cent last year, the global economy is set to slow substantially in 2023, to 2.1%, amid continued monetary policy tightening to rein in high inflation, before a tepid recovery in 2024, to 2.4%. “Global growth could be weaker than anticipated in the event of more widespread banking sector stress or if more persistent inflation pressures prompt tighter-than-expected monetary policy,” it cautioned.
