India's growth to remain robust, world economy to slow down in 2024: World Bank

NEW DELHI: The World Bank on Tuesday said that the growth in the Indian economy is expected to remain strong during the next fiscal year, driven by robust investment and services activity.

Against its projection of 6.3% expansion in 2023, the latest Global Economic Prospects has now pegged GDP growth at 6.4% in 2024 and 6.5% in 2025. The government’s advance estimates, released Friday, estimated that the Indian economy will grow 7.3% during the current financial year. At the projected growth rate, India will retain its crown as the world’s fastest growing major economy.

The multilateral agency said that investment, while decelerating marginally, will remain robust on the back of support from healthy corporate and bank balance sheets as well as public investment. This will come even as the World Bank expects consumption demand to taper off due to high inflation and a fall in post-pandemic pent up demand. Over the next few months, the election related uncertainty may impact foreign investment, it warned.

Source: World Bank Global Economic ProspectsGlobal growth is expected to slow to 2.4%, marking the third straight year of moderation, according to World Bank estimates. “Growth rates in advanced economies as a whole and in China are projected to slow in 2024 to well below their 2010-19 average paces,” it said. China is expected to slow down to 4.5% in 2024.

The report cautioned against downside risks emanating from conflicts in Ukraine and West Asia, which would put pressure on energy prices, as well as risks to the financial system due to higher interest rates, weaker growth in China and trade fragmentation. While commodity prices cooled in 2023, they remained 40% above the pre-pandemic level. While oil prices are likely to edge down to $81 a barrel, due to weak growth in China, the World Bank warned of the adverse impact of the recent attacks in the Red Sea.

Global growth is projected to pick up to 2.7% percent in 2025, as inflation is expected to slow, interest rates decline, and trade growth firms.

There may finally be some good news on the trade front in 2024 which, after growing at 0.2% -- the slowest expansion outside recessions in 50 years --- is likely to expand 2.4%. Global tourist arrivals are expected to return to pre-pandemic levels in 2024, although the recovery is set to lag in some countries where reopening was delayed.