World Bank raises India’s economic growth forecast from 6.6% to 7% for FY25

Citing the growth of agriculture output and policies as a major factor contributing to employment growth in the economy, the World Bank, in its South Asia’s Growth forecast report, has raised India’s economic growth forecast from 6.6 % to 7% for the financial year 2024-25.

According to the report, India's better-than-expected manufacturing performance in the first quarter of 2024 was supported by declining input costs as global oil prices moderated. Growth normalised to 6.7% in the second quarter of 2024 and reflected a strong recovery in private consumption and resilient services exports. Robust growth is likely to have continued into the third quarter of 2024. In July, India’s composite PMI stood at 61.4, well above both its long-term trend and the global average, with strong performance in both manufacturing and services.

It said South Asia remains the fastest-growing emerging market and developing economy region in the world. In fact, growth is now on track to be higher than anticipated six months ago, helped by strong domestic demand in India and faster recoveries in most other South Asian countries. It further said global investors are seeking locations with low geopolitical risks and strong economic fundamentals, and the region, especially India, is well-placed to benefit.

In its latest policy statement, the Reserve Bank of India maintained the GDP growth forecast for FY25 at 7.2%. Commenting on the growth forecast, RBI governor Mr Shaktikanta Das said,” India’s growth story remains intact as its fundamental drivers – consumption and investment demand – are gaining momentum. Prospects of private consumption, the mainstay of aggregate demand, look bright on the back of improved agricultural outlook and rural demand”.