World Bank predicts India dhoom amid global gloom
New Delhi: The
World Bank
has lowered India's growth forecast for FY26 to 6.3% from 6.7% estimated in January, though it's projected to remain one of the fastest growing economies globally. The country's FY27 growth is also seen 0.2 percentage point lower at 6.5%, according to the World Bank's latest Global Economic Prospects (GEP) report.
The World Bank attributed the reduction in expected growth to weaker export performance on the part of key trade partners and rising global trade barriers.
Investment growth is also expected to decelerate amid rising global policy uncertainty, the report said.
India's gross domestic product (GDP) expanded by 6.5% in FY25, according to official data released last month. Last week, the Reserve Bank of India (RBI) retained its 6.5% growth projection for FY26 as it cut the key interest rate by a higher-than-expected half a percentage point to support growth.
Global growth is expected to slow to 2.3% in 2025 compared with 2.7% projected in January, amid the rise in trade barriers and an uncertain policy environment, marking the slowest pace of expansion since 2008, excluding periods of recession.
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The US' growth forecast has been revised downwards to 1.4% in 2025 from 2.3% projected in January by the multilateral lender. China's growth projection remains unchanged at 4.5% in 2025.
India: A Bright Spot
"Emerging-market and developing economies reaped the rewards of trade integration but now find themselves on the frontlines of a global trade conflict," said M Ayhan Kose, World Bank's deputy chief economist and director of the prospects group. "India continues to grow faster than any other major economy."
The South Asian region is likely to face a slowdown with growth expected at 5.8% in 2025 compared with an estimated 6% in 2024, due to the impact of rising trade barriers, dampened business confidence and weaker investment, according to the World Bank.
Growth is then anticipated to increase to an average of 6.2% annually in 2026-27, driven by improving activity in India and elsewhere, aligning with the region's potential estimates, it added.
Per-capita income growth in South Asia is estimated to stabilise at 5%, on average, over 2025-27, which would further reduce poverty. However, excluding India, per-capita income growth is expected to rise to 3% in 2027 from 2.1% in 2025.
Between 2011-12 and 2022-23, nearly 270 million people in India were lifted out of extreme poverty in India, according to the latest data released by the World Bank.
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