World Bank(WB)’s South Asia Development Update April 2024 – Jobs for Resilience, stated that India’s economy is projected to grow by 7.5% in 2024, a revision of 1.2% from 6.3% estimated in the October 2023 report.
- India’s output growth is forecasted to reach 7.5% in FY 2023-24 (FY24) before moderating to 6.6% in FY25, primarily due to a deceleration in investments.
- South Asia is projected to maintain its status as the fastest-growing Emerging Market and Developing Economy (EMDE) region globally for the next two years, with growth anticipated at 6.1% in 2025.
Key Points:
i.Growth in South Asia is expected to be robust at 6% in 2024, driven by strong performances of India’s economy and the recoveries seen in Pakistan and Sri Lanka.
ii.Over the medium term, fiscal deficit and government debt in India are projected to decline, supported by robust output growth and consolidation efforts.
iii.India’s economic activity in the fourth quarter (Q4) of 2023 exceeded expectations with an 8.4% growth compared to the previous year, supported by increased investment and government consumption.
iv.In February 2024, India’s composite Purchasing Managers Index (PMI) stood at 60.6, well above the global average of 52.1 (a value above 50 indicates expansion).
v.In India, inflation has remained within the Reserve Bank of India’s (RBI) 2–6% target range since mid-2023, with unchanged policy rates since February 2023.
vi.Financial conditions have stayed favorable, with domestic credit issuance growing by 14% year-on-year in December 2023, marking the fastest pace since 2013, and improvements in financial soundness indicators, including a decrease in the nonperforming-loan ratio to 3.2%.
v.Despite a decrease in FDI (Foreign Direct Investment) as a share of GDP in 2023, a rebound in foreign portfolio investment inflows in FY2023/24 led to an 8% increase in foreign reserves by January 2024.
East Asia and Pacific’s growth is projected to ease to 4.5% in 2024 from 5.1% in 2023
The WB in its semi-annual economic outlook titled ‘East Asia and Pacific April 2024 Economic Update, April 2024: Firm Foundations of Growth‘ projected East Asia and Pacific’s (EAP) growth to ease to 4.5% in 2024 from 5.1% in 2023, with developing EAP excluding China expected to pick up to 4.6% from 4.4% in 2023.
Key Points:
i.China’s growth is projected to moderate to 4.5% due to factors like high debt, a weak property sector, and trade frictions.
ii.Pacific Island countries are anticipated to experience a slowdown in growth, particularly in Fiji.
iii.Concerns persist over debt, trade barriers, and policy uncertainties affecting the region’s economic dynamism.
iv.The report calls for addressing long-term issues like weak social safety nets and underinvestment in education.
External Factors Affecting Economic Performance in EAP Region:
i.Global trade recovery, though slowing global Gross Domestic Product (GDP) growth, is projected to support economic performance, with trade in goods and services expected to grow by 2.3% in 2024 from 0.2% in 2023.
- GDP growth will slow down from 2.6% in 2023 to 2.4% in 2024.
ii.Despite declining inflation in major economies, elevated core inflation and tight labor markets in the United States (US) and European Union (EU) suggest interest rates will remain higher, impacting economic conditions.
iii.The imposition of nearly 3,000 new trade-distorting measures in 2023 raises concerns about increasing protectionism, potentially hindering growth in EAP.
Recent Related News:
i.Sikkim Chief Minister (CM) Prem Singh Tamang launched Sikkim INSPIRES (Integrated Service Provision and Innovation for Revising Economics), a World Bank(WB)-assisted program under the Planning and Development Department of the Government of Sikkim was launched at Chintan Bhavan, Gangtok, Sikkim.
ii.The Government of Goa has announced a partnership with the World Bank (WB) to establish a Blended Finance Facility (BFF) for climate resilience. This initiative aims to access and mobilise concessional finance to implement low-carbon and climate-resilient investment in Goa.
About World Bank (WB):
WB Group President– Ajay Banga
Headquarters– Washington, DC, USA
Establishment– 1944
