India to lead global growth with 6.7% average over next three years: World Bank

India will remain the fastest-growing major economy, recording a steady growth rate of 6.7 percent over the next three years, including the current financial year, according to a recent World Bank report. The report estimates India’s growth for the fiscal year 2023/24 (April 2023 to March 2024) at 8.2 percent, which is 1.9 percentage points higher than previously projected in January. This information is part of the World Bank’s latest Global Economic Prospects report.

“After a high growth rate in FY2023/24, steady growth of 6.7 percent per year, on average, is projected for the three fiscal years beginning in FY2024/25,” the report noted.

This moderation is primarily due to a slowdown in investment from a high base. However, investment growth is expected to remain robust over the forecast period, with strong public investment supported by private investment.

Private consumption growth is anticipated to benefit from recovering agricultural production and declining inflation. Government consumption, however, is projected to grow slowly, aligning with the government’s aim to reduce current expenditure relative to GDP.

Global growth is projected to hold steady at 2.6 percent in 2024, rising slightly to an average of 2.7 percent in 2025-26. This is well below the pre-pandemic average of 3.1 percent per year.

Growth in South Asia is expected to be slow from 6.6 percent in 2023 to 6.2 percent in 2024. However, regional growth is expected to remain steady at 6.2 percent in 2025-26. Among other South Asian economies, growth will remain robust in Bangladesh, albeit at a slower rate than in recent years, and is expected to strengthen in Pakistan and Sri Lanka.

Global inflation is expected to moderate to 3.5 percent in 2024 and 2.9 percent in 2025, though the pace of decline is slower than projected six months ago. Consequently, many central banks are likely to remain cautious in lowering policy interest rates. Global interest rates are projected to remain high, averaging about 4 percent over 2025-26, roughly double the 2000-19 average.

In India, inflation has remained within the Reserve Bank’s target range of 2 to 6 percent since September 2023. However, regional inflation, while below peak levels, remains elevated due to persistently high food prices due to local supply disruptions and increased energy prices.