In June 2025, The World Bank (WB) released its biannual report titled Global Economic Prospects (GEP) for June 2025. The report has projected that India’s Gross Domestic Product (GDP) will grow at a rate of 6.3% in Financial Year 2025-26 (FY26), 6.5% in FY 27 and 6.7% in FY28.
- The WB downgraded the projection for FY26 by 40 basis points (bps), FY27 by 20 bps from its GEP for January 2025.
India-specific:
i.Though the projection has been lowered than the previous estimate, India will still remain the fastest growing large economy.
ii.In India, the growth moderated, reflecting a slowdown in investment on the demand side and a deceleration in industrial output growth on the supply side.
- But, the growth in construction and services activity remained steady, and agricultural output recovered from earlier severe drought conditions, supported by resilient demand in rural areas.
iii.Fiscal consolidation is expected to continue in India over the forecast horizon, with growing tax revenues and declining current expenditures projected to contribute to a gradual decline in the public debt-to-GDP (Gross Domestic product) ratio.
Global Scenario:
i.In its June GEP, the WB lowered its global GDP growth forecast to 2.3 % for 2025 and 2.4% for 2026, making downward revision of 0.4% and 0.3% respectively from its previous projection.
ii.As per the report, heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008 outside of outright global recessions.
- The turmoil has resulted in growth forecasts being cut in nearly 70% of all economies—across all regions and income groups.
iii.While, the WB projects global inflation to average 2.9% in both 2025 and 2026, before easing to 2.5% in 2027.
iv.The World Bank also made the following recommendation to revive the growth:
- Policymakers should concentrate on boosting domestic revenue generation, directing fiscal spending toward the most vulnerable households, and reinforcing fiscal policy frameworks.
About World Bank (WB):
President – Ajay Banga
Headquarters – Washington DC, the United States of America (USA)
Established – 1944
