Indian economy: Based on recovery in Pakistan and Sri Lanka and robust development in India, the World Bank projects a 6% growth in South Asia by 2024.
In short
- The World Bank projects that India’s economy will expand by 7.5% by 2024.
- The overall economic growth of South Asia is expected to be 6%.
- Worries regarding financial stability and the effects of climate change.
In 2024, the World Bank projects that the Indian economy will grow at a 7.5% rate.
Previously, the World Bank projected a 6.3% growth, but they have now revised it upward to 7.5%.
According to the latest report from the World Bank, the anticipated economic growth for South Asia, encompassing nations such as India, Pakistan, and Sri Lanka, is poised to be robust at 6.0% in 2024. This growth is primarily attributed to the strong performance of India’s economy and the recoveries observed in Pakistan and Sri Lanka.
The bank noted in its report that in India, which constitutes the majority of the region’s economy, output growth is projected to hit 7.5% in FY23/24 before stabilizing at 6.6% over the medium term. It further highlighted that activity in the services and industry sectors is anticipated to sustain their robust performance.
Bangladesh’s economy is forecasted to expand by 5.7% in the fiscal year 2024/25. Nevertheless, elevated inflation rates and trade restrictions could potentially constrain economic activity within the country.
The Pakistani economy is expected to experience a 2.3% growth in the fiscal year 2024/25, following a contraction in the preceding year. This growth is attributed to enhanced business confidence. Likewise, Sri Lanka is anticipated to undergo a slight recovery, with output growth projected at 2.5% in 2025.
Although short-term growth prospects appear favorable for South Asia, there are apprehensions regarding fiscal stability and the escalating influence of climate change on the region.
South Asia’s short-term growth outlook appears optimistic, yet fragile fiscal conditions and rising climate-related challenges loom as potential threats,” remarked Martin Raiser, Vice President for South Asia at the World Bank. “To fortify growth resilience, nations must implement policies aimed at enhancing private investment and bolstering employment opportunities.”
Currently, South Asia is not fully leveraging its demographic dividend, which represents a missed opportunity,” stated Franziska Ohnsorge, Chief Economist for South Asia at the World Bank.
In the final quarter of 2023, economic activity in India surpassed expectations, achieving a growth rate of 8.4% in contrast to the prior year. This was fueled by heightened levels of investment and government spending. Furthermore, the Composite Purchasing Managers Index (PMI) for India registered at 60.6 in February, signaling an expansion in economic activities.
Indian economy
According to the report, inflation in India has remained within the Reserve Bank of India‘s target range of 2-6% following a surge in mid-2023. The policy rate, set by the central bank, has remained unchanged since February 2023. Additionally, the report notes that food prices have been elevated, partially due to a subpar harvest induced by El Nino.
In the coming period, the World Bank anticipates a slight moderation in India’s economic growth during the fiscal year 2024/25, attributed to a slowdown in investment.
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Nevertheless, the services and industry sectors are anticipated to maintain strong growth, buoyed by construction and real estate endeavors. Looking ahead, it is projected that India’s fiscal deficit and government debt will decrease over the medium term, owing to robust economic growth and governmental initiatives aimed at consolidation.