Context:
The recently released World Bank’s Global Economic Prospects Report says India’s GDP growth is estimated at 6.7% in 2024-2026.
Key highlights of the report
- The Indian economy is projected to grow an average of 6.7% per fiscal year from 2024 through 2026, making South Asia the world’s fastest-growing region.
- The report says India will remain the fastest-growing large economy.
- India is set to report 6.6%, 6.7% and 6.8% growth, respectively, in FY24, FY25 and FY26.
- Global gross domestic product (GDP) growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025 and 2026. This is below the 3.1% average in the decade before covid-19.
- Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago.
- Global interest rates are likely to remain high, averaging about 4% over 2025-26, roughly double the 2000-19 average, according to the World Bank.
Global Economic Prospects Report
It is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies, on a semi-annual basis (in January and June).
Forecast for 2024
- In advanced economies, growth is set to remain steady at 1.5% in 2024 before rising to 1.7% in 2025.
- Developing economies are projected to grow 4% on average over 2024-25, slower than in 2023.
- Growth in low-income economies is expected to accelerate to 5% in 2024 from 3.8% in 2023.
- Growth in the South Asia Region (SAR) is projected to slow from 6.6% in 2023 to 6.2% in 2024.
Recommendations for EMDEs
- Scale Up Public Investment: Increase public investment by one percent of GDP by emerging market and developing economies (EMDEs) can potentially boost output by up to 1.6 percent over the medium term.
- Catalyze Private Investment: Utilize public investment to crowd in private investment and enhance productivity, promoting long-term growth.
- Improve Public Investment Efficiency: Undertake policy reforms to strengthen governance and fiscal administration.
- Create Fiscal Space: Implement revenue and expenditure reform measures to create fiscal space for increased public investment.
- Leverage Global Support: Seek financial support and technical assistance from the global community, particularly for lower-income developing countries, to facilitate reforms.