The Indian economy is projected to grow at 7.5 percent in 2024, the World Bank has said, revising its earlier projections for the same period by 1.2 percent.
The World Bank forecasts India’s output growth to reach 7.5 percent in FY24, driven by resilient activity in services and industry. However, growth is expected to moderate to 6.6 percent over the medium term.
Medium-Term Outlook for India
The World Bank projects India’s output growth to reach 7.5 perecnt in FY24 before moderating to 6.6 percent in FY25. The expected slowdown mainly reflects a deceleration in investment from its elevated pace in the previous year.
Over the medium term, the fiscal deficit and government debt in India are projected to decline, supported by robust output growth and consolidation efforts by the central government.
India’s Recent Economic Performance
India’s economic activity in 2023Q4 exceeded expectations, with an 8.4 percent growth compared to the previous year, supported by increased investment and government consumption.
India’s composite purchasing managers index (PMI) stood at 60.6 in February, well above the global average of 52.1, indicating expansion. Inflation has remained within the Reserve Bank of India’s (RBI) target range, and financial conditions have remained accommodative.
Domestic credit issuance to the commercial sector grew by 14 percent year-on-year (YoY) in December 2023, with financial soundness indicators showing improvement. Foreign reserves increased by 8 percent in the year to January 2024.
South Asia Expected To Be Fastest-Growing Region Over Next Two Years
In its latest South Asia Development Update, released on April 2, the World Bank predicts a robust growth of 6 percent in South Asia for 2024. This growth is primarily attributed to India’s strong performance, along with recoveries in Pakistan and Sri Lanka.
The report indicates that South Asia is poised to remain the world’s fastest-growing region for the next two years, with a projected growth rate of 6.1 percent in 2025.
Bangladesh is expected to see a rise in output by 5.7 percent in FY25, while Pakistan’s economy is projected to grow by 2.3 percent in the same period. Sri Lanka’s output growth is anticipated to strengthen to 2.5 percent in 2025.
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