In January 2025, The World Bank(WB) released its biannual report titled Global Economic Prospects (GEP) for January 2025. The report has projected that India’s Gross Domestic Product (GDP) will grow at a rate of 6.7% over the next two financial years i.e. for Financial Year 2025-26 (FY26) and FY27.
- The projection for FY26 remained same from its GEP for June 2024 and growth rate for FY27 was revised downwards by 10 basis point (bps), from its previous estimate of 6.8%.
India-Specific:
i.The report has estimated India’s GDP growth rate for the current financial year (FY25) at 6.5%, down from the 8.2% in FY24, due to slowdown in investment and weak manufacturing growth.
ii.The report underscored that India’s services sector is expected to maintain its growth, while manufacturing activity is projected to strengthen, supported by government initiatives to improve logistics infrastructure and business conditions through tax reforms.
- It further highlighted that Private Consumption growth is expected to increase due to a stronger labour market, expanding credit, and decreasing inflation.
iii.As per the report, investment growth is expected to be stable, strengthened by increasing private investment, strong balance sheets, and easing financing conditions.
Global Scenario:
i.The report has estimated that global growth will remain stable at 2.7% in both 2025 and 2026. This projection is based on the gradual decline in inflation and interest rates.
- However, the report highlighted that this projection for global growth rate is less than 3.1% recorded in the decade before the COVID-19 pandemic.
ii.The report has cautioned about certain risks that may pose certain challenges to the global economy such as heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters.
iii.The report projected that South Asia Region (SAR) is estimated to grow at 6.2% in 2025 and 2026, compared to a 6% growth in 2024. This projection is mainly driven by the robust growth in India.
About World Bank (WB):
President– Ajay Banga
Headquarters– Washington, DC, the United States of America (USA)
Established– 1944
