World Bank retains India's 2025-'26 GDP growth forecast at 6.3%
India's economy is projected to grow at a rate of 6.3% in the financial year 2025-'26, a World Bank report said on Tuesday.
In its latest 'Global Economic Prospects' report, the international financial institution retained its gross domestic product growth forecast for the current fiscal, which it had cut by 40 basis points in April.
A basis point is one-hundredth of a percentage point. Basis points are used to describe the percentage change in the value of a financial instrument.
The World Bank, however, flagged concerns about a potential slowdown in investment due to global economic uncertainty. India will be the fastest-growing large economy in the world at the projected rate, the report said.
The bank also cut its growth forecast for India by 20 basis points for 2026-'27 to 6.5%. The gross domestic product is expected to grow at 6.7% in 2027-'28, with economic activity 'partly supported by robust services activity that contributes to a pick up of exports'.
The retention of the 6.3% growth forecast for India by the World Bank comes days after the Reserve Bank of India announced a larger-than-expected 50 basis point cut in its policy repo rate on June 6, bringing it down to 5.5%.
The repo rate is the interest rate at which the central bank lends money to commercial banks.
The Reserve Bank of India's Monetary Policy Committee decides on changes to it every two months. Central banks usually reduce repo rates to stimulate economic growth by making borrowing cheaper for individuals and businesses.
This translates to lower equated monthly instalments for borrowers.
World Bank cuts global growth forecast of 70% economies
The World Bank also made reductions to growth forecasts for nearly 70% of the economies due to 'heightened trade tensions and policy uncertainty'.
This is expected to drive down the global growth in 2025 to 2.3%, the slowest pace since 2008 outside of outright global recessions, The Indian Express reported.
In January, global growth for 2025 was projected to be 2.7%.
In 2026, growth is expected to pick up only slightly to 2.4%, a decrease from the 2.7% previously predicted in January.
While a worldwide recession is not expected, the projected average global growth for the first seven years of the 2020s is set to be the slowest since the 1960s if these predictions hold true.
The World Bank said that global growth could rebound more rapidly than the current forecast if major economies manage to de-escalate trade tensions. This will reduce policy uncertainty and financial volatility, it added.
'The analysis finds that if today's trade disputes were resolved with agreements that halve tariffs relative to their levels in late May, global growth would be 0.2 percentage point stronger on average over the course of 2025 and 2026,' the financial institution said.
On April 2, the United States announced 'reciprocal' tariffs on dozens of countries, including a 26% 'discounted' levy on India. US President Donald Trump had repeatedly said he intended to impose a reciprocal tax on India, among others, citing the high tariffs the countries impose on foreign goods.
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