World Bank's latest Global Economic Prospects Report gives overview of Global Economy for the 1st quarter of 21st Century (refer to the infographic).
Key Highlights
- Rising influence of EMDEs: Emerging Market and Developing Economies (EMDEs), led by the EM3 nations (China, India, and Brazil), have significantly increased their share in the global economy from 2000 to 2025.
- India's Growth Leadership: India remains the fastest-growing economy, with projected 6.7% annual growth through FY26–FY27, slightly below the 7% achieved in 2022.
Factors reflecting robustness of Indian Economy
- Strong Sectoral Performance:
- Services: The services sector is set for sustained expansion, with rising service exports boosting trade integration in South Asia since 2000.
- Manufacturing: Manufacturing is strengthened to grow, driven by government initiatives to improve logistics and tax reforms
- Solid Economic Foundation
- Fiscal Health: Shrinking fiscal deficits and increasing tax revenues.
- Investment Outlook: Investment growth overall is expected to be steady, with rising private investment, supported by healthy corporate balance sheets and easing financing conditions.
- Consumption outlook: Private consumption growth is expected to be boosted by a strengthening labor market, expanding credit, and declining inflation.
- However, government consumption growth is likely to remain contained.
The report identifies key challenges, including rising protectionism, geopolitical tensions, mounting debt burdens, and climate change-related costs. Success requires focused policies on boosting investment, productivity, and macroeconomic stability while effectively managing external pressures.
