• Wed. Feb 28th, 2024

The World Bank cuts India’s growth in FY24 and sees a sharp slowdown in the global economy

The World Bank cuts India’s growth in FY24 and sees a sharp slowdown in the global economy

The World Bank revised India’s 2023-24 growth forecast downwards due to a slowdown in private consumption and a global slowdown, but said the country will remain the world’s fastest growing economy.

According to a World Bank report, India’s private investment is likely to be boosted by increasing corporate profits, with unemployment falling to 6.8% in the first quarter of 2023.

According to the bank’s latest Global Economic Prospects report released on Tuesday, GDP growth in Asia’s third largest economy in FY24 was 6.3% compared to 6.6% in January.

A “pronounced slowdown” in advanced economies predicts the global economy will “slow significantly” this year, the report added.

According to the report, India’s private investment is likely to be boosted by increasing corporate profits, while unemployment fell to 6.8% in the first quarter of 2023, the lowest rate since the start of the COVID-19 pandemic. Labor force participation also increased.

The downward revision to India’s GDP in 2024 mainly reflects the impact on the back of tightening domestic policies and global financial conditions. India’s higher-than-expected resilience in private consumption, however, remains subdued, with investment and a strong services sector supporting growth in 2023, the bank said. India’s core consumer price inflation is back within the central bank’s 2-6% tolerance band.

“In India, which accounts for three-quarters of the region’s (South Asia) output, growth in early 2023 remained below that achieved in the pre-pandemic decade, as higher prices and rising borrowing costs weighed on private consumption,” the report said.

India’s economy grew by 7.2% from a year ago in 2022-23, higher than previously estimated, while GDP growth accelerated to 6.1% in the January-March quarter, pointing to an improving economy, National Statistical Office (NSO) data released on May 31 showed.

Global growth has slowed sharply and the risk of financial stress in emerging market and developing economies (EMDEs) is intensifying amid high global interest rates, the bank said.

According to the bank’s assessment, global growth is expected to decelerate from 3.1% in 2022 to 2.1% in 2023. In EMDEs excluding China, growth will slow to 2.9% this year from 4.1% last year. These latest forecasts reflect broad-based downgrades from earlier estimates.

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