The World Bank has retained India’s GDP growth forecast at 6.3% for 2023-24 despite enduring and escalating global challenges.
"The expected moderation (from 7.2% in 2022-23) is mainly due to challenging external conditions and waning pent-up demand," the World Bank said in its India Development Update report, released on October 3.
The World Bank's growth forecast for the current financial year is 20 basis points lower than that of the Indian government and the Reserve Bank of India (RBI).
“ An adverse global environment will continue to pose challenges in the short-term. Tapping public spending that crowds in more private investments will create more favourable conditions for India to seize global opportunities in the future and thus achieve higher growth,” said Auguste Kouame, the Bank's Country Director in India.
Although the World Bank anticipates a slowdown in growth this year, it foresees a gradual increase in the following two years, reaching 6.4% and 6.5%, respectively.
This update from the Bank follows the release of data in August, which revealed that India's growth surged to 7.8% during the first quarter of the 2023-24 fiscal year. This figure was slightly above economists' expectations of 7.7% but fell short of the RBI's forecast of 8%.
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On the other hand, the Bank has raised India’s inflation projection rate from 5.2% to 5.9%. "Private consumption growth is likely to slow as the post-pandemic catch up fades, and external demand for India’s exports will be affected by slowing growth in major trading partners, including the EU," the World Bank said.