India will remain the fastest-growing of the world’s largest economies although its pace of expansion is expected to moderate with a steady average annual growth of 6.7% between FY25 and FY27, the World Bank said in its June Global Economic Prospects report.
It raised India’s growth projection by 0.2 percentage points each to 6.6% for FY25 and 6.7% in FY26 compared with its projection in January this year. This is, however, way below the 7.2% projected by the Reserve Bank of India last week.
In India, growth is estimated to have picked up to 8.2% in 2023-24, 1.9 percentage points higher than estimated by the World Bank in January.
“This (between FY25 and FY27) moderation is mainly due to a slowdown in investment from a high base,” the multilateral agency said. 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.
“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 said.
In its report, the Bank said global growth is projected to stabilize at 2.6% this year, holding steady for the first time in three years despite flaring geopolitical tensions and high interest rates.
It is then expected to edge up to 2.7% in 2025-26 amid modest growth in trade and investment. Global inflation is projected to moderate—but at a slower clip than previously assumed, averaging 3.5% this year, it added.
Growth in South Asia Regio is projected to slow to 6.2% in 2024 and stay at that rate in 2025-26, mainly reflecting steady growth in India—broadly consistent with potential growth estimates in the region but weaker than the pre-pandemic longer term averages.