World Bank raises GDP forecast, says India will retain its fastest growing economy status

The World Bank said India will remain the fastest growing economy among the world's largest economies, although its pace of expansion is expected to slow.

In its latest Global Economic Prospects report, the international financial institution attributed the revision in India's growth forecasts to strong public investment as well as increased private capital expenditure and private consumption.

India's industrial activity, including manufacturing and construction, grew more than expected, as did resilient services activity, helping partly offset a slowdown in agricultural output caused by the monsoon.

Domestic demand growth remained strong, driven by increased investment, including in infrastructure, which offset the slowdown in consumption growth caused by the release of pent-up demand following the pandemic.

Similarly, the World Bank has raised its growth projections for 2025-26 from 6.5 per cent to 6.7 per cent.

“India's economy is driven by strong domestic demand, a surge in investment, and robust services activity. It is projected to grow at an average of 6.7 per cent in each fiscal year from 2024 to 2026 – making South Asia the world's fastest-growing region,” the World Bank report said.

GDP per capita in EMDEs (emerging market and developing economies), which includes India, is projected to grow at an average rate of about 3 per cent during 2024-26, well below the 2010-19 average.

“Some large EMDEs, such as India, are expected to continue to see solid per capita growth,” it said.

Activity in commodity importers has been strong except for China. “This mainly reflects resilience due to continued strength in domestic demand in some large economies, particularly India. Growth in other commodity importers has been more subdued so far this year.”

According to official data from the Government of India, India's GDP grew by a massive 8.2 percent during the financial year 2023-24 and the country remained the fastest growing major economy. India's economy grew by 7.2 percent in 2022-23 and 8.7 percent in 2021-22.

The Reserve Bank of India in its latest monetary policy meeting has raised its GDP forecast for 2024-25 to 7.2 per cent from 7 per cent earlier.

Morgan Stanley estimates India's growth rate to be 6.8 percent in 2024.

According to the International Monetary Fund's latest World Economic Outlook, India will remain the fastest growing country among major economies in 2024. The IMF has raised India's growth projections for 2024 from 6.5 per cent to 6.8 per cent in its latest scenario.

The United Nations recently raised India's economic growth forecast for 2024 to 6.9 per cent from 6.2 per cent, driven mainly by strong public investment and resilient private consumption.

Moody's Ratings expects India's growth rate to be 6.6 percent in the current financial year 2024-25.

The Organisation for Economic Co-operation and Development (OECD) estimates India's growth rate to be 6.6 per cent over the next two years.

The Asian Development Bank (ADB) has raised its forecast for India's gross domestic product (GDP) growth rate for FY24 to 7 percent from 6.7 percent.