On April 2, the World Bank raised India’s FY25 GDP growth forecast by 20 basis points to 6.6 percent.
The global agency’s projection for FY25 is notably subdued compared to its estimate of real GDP growth of 7.5 percent in the current financial year. But he expects growth to pick up in the coming years as a decade of massive public investment begins to pay dividends.
In its second advance GDP estimate for 2023-24, India’s statistics ministry pegged the current-year growth rate at 7.6 percent, up 30 basis points from its first advance estimate of 7.3 percent.
The expected slowdown in growth between 2023–24 and 2024–25 mainly reflects a slowdown in investment from its increased pace in the previous year. However, growth in services and industry is expected to remain strong, supported by strong construction and real estate activity.
Inflationary pressures are expected to subside, creating more policy space for easing financial conditions. Over the medium term, the fiscal deficit and government debt are expected to decline, supported by strong output growth and the central government’s consolidation efforts, the World Bank said in its April 2024 South Asia Development Update.
The update said growth in South Asia is projected at 6.0-6.1 percent in 2024-25, stronger than other emerging markets and developing economies, mainly due to strong economic activity in India.
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South Asia as used in this report includes Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
South Asia’s growth outlook is slightly stronger than in the previous edition of this report, at 0.4 percentage points for 2024 and 0.3 percentage points for 2025. This is mainly due to upward revisions to investment growth in India and a slightly faster recovery than expected. last year’s recession in Pakistan and Sri Lanka, the World Bank said in an update.
