India's Economy Projected to Grow at 6.7% for Two Years: World Bank

World Bank Projects India's Economy to Grow at 6.7% for Next Two Fiscal Years

Sustained Growth Forecast for India

The World Bank has released its latest growth estimates for South Asia, projecting that India's economic growth will remain steady at 6.7% per annum for the next two fiscal years, starting in April 2025. This consistent growth is expected to contribute significantly to the overall economic expansion of the South Asian region, which is predicted to reach 6.2% in 2025-26.

According to the World Bank, the services sector in India is expected to continue its robust expansion, while manufacturing activity will gain strength, bolstered by government initiatives aimed at improving the business environment. The report also anticipates steady investment growth, with moderating public investment being offset by increased private investment.

Growth Moderation in Current Fiscal Year

While the outlook for the next two fiscal years is positive, the World Bank projects a slight softening of India's growth to 6.5% in the current fiscal year 2024/25 (April 2024 to March 2025). This moderation is attributed to a slowdown in investment and weaker manufacturing growth.

However, the report notes that private consumption growth has remained strong, largely due to improved rural incomes and a recovery in agricultural output.

Regional Economic Outlook

Excluding India, the South Asian region is estimated to have grown by 3.9% in 2024, largely due to economic recoveries in Pakistan and Sri Lanka, supported by improved macroeconomic policies. However, other countries in the region are facing challenges.

• Bangladesh: Political instability in mid-2024 has negatively impacted economic activity and investor confidence. Supply constraints, including energy shortages and import restrictions, have weakened industrial activity and increased price pressures.

The World Bank forecasts that growth in the region, excluding India, will strengthen to 4% in 2025 and 4.3% in 2026. However, the forecast for this year has been slightly downgraded due to a less optimistic outlook for Bangladesh amidst economic and policy uncertainties.

Bangladesh Economic Projections

For Bangladesh, growth is projected to decline to 4.1% in FY2024/25 (July 2024 to June 2025) before rebounding to 5.4% in FY2025/26. Heightened political uncertainty is expected to keep investment and industrial activity subdued in the near term.

Categories: Economic Growth Forecast, Indian Economy, World Bank