Global Economic Prospects Report: India's Growth Forecast

The World Bank has revised India's growth forecast for FY26 to 6.3%, down from the previous estimate of 6.7% in January. Despite this reduction, India is projected to remain one of the fastest-growing economies globally. The forecast for FY27 has also been adjusted downward by 0.2 percentage points to 6.5%.

Reasons for Growth Forecast Revision

• Weaker export performance from key trade partners.
• Rising global trade barriers.
• Deceleration in investment growth due to global policy uncertainty.

Current Economic Indicators

• India's GDP expanded by 6.5% in FY25.
• The Reserve Bank of India (RBI) maintains a 6.5% growth projection for FY26.
• Global growth is expected to slow to 2.3% in 2025, the slowest pace since 2008, excluding recessions.

Global Economic Context

• The US growth forecast for 2025 is revised to 1.4% from 2.3%.
• China's growth projection remains steady at 4.5% for 2025.
• M Ayhan Kose, World Bank's deputy chief economist, highlights the impact of global trade conflicts on emerging markets.

South Asia Economic Outlook

• Projected growth for the South Asian region is 5.8% in 2025, down from 6% in 2024.
• Growth is expected to average 6.2% annually in 2026-27.
• Per-capita income growth in South Asia will average 5% over 2025-27, aiding poverty reduction.
• Excluding India, per-capita income growth is projected to rise to 3% in 2027 from 2.1% in 2025.

Poverty Alleviation in India

Between 2011-12 and 2022-23, approximately 270 million people in India were lifted out of extreme poverty, as reported by the World Bank.