According to the World Bank, India will continue to be the fastest-growing economy in terms of aggregate and per capita GDP among the largest emerging market and developing nations. It retained India’s growth prediction for FY24 at 6.3%.
The global development bank in its report “Global Economic Prospects” stated, “Greater than expected resilience in private consumption and investment, and a robust services sector in India, is supporting growth in 2023. Growth is projected to pick up slightly through FY26 as inflation moves back toward the midpoint of the tolerance range and reforms payoff”.
The World Bank remarks on India’s growth, due to rising borrowing costs and higher prices, private consumption in India in early 2023 was lower than the decade prior to the epidemic.
However, after contracting in the second half of 2022, manufacturing rebounded into 2023, and investment growth remained buoyant as the government increased capital expenditure.” Rising corporate profits are also likely to have bolstered private investment.
Unemployment declined to 6.8% in the first quarter of 2023, the lowest level since the Covid-19 pandemic began, while labour force participation surged. “India’s headline consumer price inflation has returned to within the central bank’s 2-6% tolerance band,” it added.
The National Statistical Office issued data last week that showed GDP growth of 6.1% in the March quarter and 7.2% in FY23, both of which exceeded analysts’ predictions. Analysts revised their FY24 GDP growth projections upward in response to the robust GDP data and optimistic hints from high-frequency indicators. SBI increased its FY24 growth forecast to 6.7% from 6.2%, while JP Morgan revised it to 5.5% from 5% previously.
According to the World Bank, after rising 3.1% last year, the global economy is expected to drop significantly in 2023, to 2.1%, due to prolonged monetary policy tightening to rein in excessive inflation, before a modest recovery in 2024, to 2.4%. “Global growth could be weaker than expected if there is more widespread banking sector stress or if persistent inflation pressures prompt tighter-than-expected monetary policy,” the report claimed.
