India To Lead Global Economic Growth With 6.7% Annual Increase Over Next Three Years: World Bank

The World Bank's latest Global Economic Prospects report highlights that India's growth rate is estimated to have surged to 8.2 per cent in the fiscal year 2023/24 (April 2023 to March 2024)

World Bank says private consumption growth in India is expected to benefit from a recovery in agricultural production and declining inflation. ( Image Source :World Bank )

India is set to remain the fastest-growing major economy, with a consistent growth rate of 6.7 per cent over the next three years, including the current fiscal year, according to a World Bank report released on Tuesday. The World Bank's latest Global Economic Prospects report highlights that India's growth rate is estimated to have surged to 8.2 per cent in the fiscal year 2023/24 (April 2023 to March 2024). This figure is 1.9 percentage points higher than the January estimates.

Globally, economic growth is projected to stabilise at 2.6 per cent in 2024, with a slight increase to an average of 2.7 per cent in 2025-26. This is significantly lower than the pre-Covid-19 decade average of 3.1 per cent. "The forecast suggests that from 2024 to 2026, countries accounting for over 80 per cent of the world's population and global GDP will experience slower growth compared to the decade before Covid-19," the report said.

In the South Asia region, growth is expected to decelerate from 6.6 per cent in 2023 to 6.2 per cent in 2024, largely due to a reduction in India's growth from its recent high levels. Despite this, regional growth is anticipated to remain at 6.2 per cent in 2025-26. Other regional economies, such as Bangladesh, are expected to see robust growth, albeit at a slower pace, while growth in Pakistan and Sri Lanka is projected to strengthen.

"India will remain the fastest-growing among the world's largest economies, although its growth rate is expected to moderate. Following a high growth rate in FY2023/24, an average annual growth of 6.7 per cent is projected for the three fiscal years starting from FY2024/25," the report noted.

The anticipated slowdown is attributed primarily to a decrease in investment from previously high levels. Nonetheless, investment growth is still projected to be robust, driven by strong public investment and supported by private sector investment.

Private consumption growth in India is expected to benefit from a recovery in agricultural production and declining inflation. However, government consumption is projected to grow slowly, aligning with the government's strategy to reduce current expenditure relative to GDP.

On a global scale, inflation is expected to decrease to 3.5 per cent in 2024 and 2.9 per cent in 2025, though the decline is slower than previously anticipated. Consequently, many central banks are likely to remain cautious about lowering policy interest rates. Global interest rates are expected to stay high by recent historical standards, averaging about 4 per cent over 2025-26, nearly double the average from 2000 to 2019.

In India, the World Bank report noted that inflation has remained within the Reserve Bank's target range of 2 per cent to 6 per cent since September 2023. However, in the broader South Asia region, inflation, though below peak levels, remains elevated due to persistent high food prices caused by local supply disruptions and increased energy prices.