Introduction: The World Bank (WB) has revised its projection for India’s economic growth to 7.5% in 2024, up from the previously estimated 6.3% in October 2023. This forecast is part of the World Bank’s South Asia Development Update April 2024 – Jobs for Resilience.
Key Points:
- Growth Forecast: India’s economy is projected to grow by 7.5% in FY 2023-24 before moderating to 6.6% in FY25 due to a slowdown in investments.
- South Asia Growth: The region is expected to maintain its status as the fastest-growing Emerging Market and Developing Economy (EMDE) globally, with a projected growth of 6.1% in 2025.
- Regional Performance: South Asia’s growth is driven by strong economic performance in India and recoveries in Pakistan and Sri Lanka, with an expected regional growth of 6% in 2024.
Economic Highlights:
- Fiscal and Government Debt: India’s fiscal deficit and government debt are expected to decline over the medium term, supported by robust output growth and consolidation efforts.
- Q4 2023 Performance: India’s economic activity exceeded expectations with an 8.4% growth year-on-year, supported by increased investment and government consumption.
- Purchasing Managers Index (PMI): India’s composite PMI was 60.6 in February 2024, significantly above the global average of 52.1.
- Inflation and Credit: Inflation has remained within the RBI’s target range of 2–6% since mid-2023. Domestic credit issuance grew by 14% year-on-year in December 2023, the fastest pace since 2013.
- Foreign Investments: Despite a decrease in FDI as a share of GDP in 2023, foreign portfolio investment inflows led to an 8% increase in foreign reserves by January 2024.
EAP Growth Projected to Ease to 4.5% in 2024
Introduction: The World Bank’s semi-annual economic outlook titled “East Asia and Pacific April 2024 Economic Update: Firm Foundations of Growth” projects growth in the East Asia and Pacific (EAP) region to ease to 4.5% in 2024 from 5.1% in 2023.
Key Points:
- China’s Growth: Projected to moderate to 4.5% due to high debt, a weak property sector, and trade frictions.
- Pacific Islands: Anticipated slowdown in growth, particularly in Fiji.
- Regional Challenges: Debt, trade barriers, and policy uncertainties continue to affect economic dynamism.
- Long-Term Issues: The report highlights the need to address weak social safety nets and underinvestment in education.
External Factors:
- Global Trade Recovery: Expected to support economic performance, with trade in goods and services projected to grow by 2.3% in 2024.
- Interest Rates: Elevated core inflation and tight labor markets in the US and EU suggest that interest rates will remain higher, impacting economic conditions.
- Trade Measures: The imposition of nearly 3,000 new trade-distorting measures in 2023 raises concerns about increasing protectionism.
Recent Related News:
- Sikkim INSPIRES: Launched by Sikkim CM Prem Singh Tamang, this WB-assisted program aims to revise economic services in the state.
- Goa’s Climate Initiative: The Government of Goa announced a partnership with the World Bank to establish a Blended Finance Facility (BFF) for climate resilience, aiming to implement low-carbon and climate-resilient investments.
Conclusion: The World Bank’s projections highlight robust economic growth for India and South Asia, despite challenges and slowing growth in the EAP region. The focus on sustainable and inclusive growth remains critical for long-term resilience and development.
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