World Bank raises India's FY25 GDP growth forecast to 7% from 6.6% earlier

The World Bank has raised India's growth forecast for the current financial year to 7%, up from 6.6%, thanks to increased government spending on infrastructure. The World Bank's India Development Update report attributes this growth to enhanced public investment in infrastructure and rising household investments in real estate. The robust manufacturing sector grew by 9.9% on the supply side, and resilient services activity has compensated for underperformance in agriculture. Despite a slowdown to 6.7% growth in April-June 2024-25, primarily due to weaker agriculture and services sectors, India grew 8.2% in FY24, making it the fastest-growing major global economy.

The World Bank’s country director for India, Mr. Auguste Kouame, affirmed that India’s dynamic growth amid global challenges makes it unlikely to fall into the middle-income trap if current policies and reforms continue. The International Monetary Fund (IMF) revised its GDP growth forecast for FY25 to 7%. In comparison, Moody’s Ratings has increased its projection for 2024 to 7.2%. The World Bank’s medium-term outlook remains positive, with a projected GDP growth of 6.7% for FY26 and FY27. The report highlights high youth unemployment at around 17% and notes a decline in direct employment related to exports. The World Bank forecasts inflation at 4.5% for FY25, with a gradual decline to 4.1% in FY26 and 4% in FY27, recommending monetary policy that targets both core and headline inflation.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.