World Bank expects Indian economy to grow at 7.5% in FY24, raises earlier forecast by 1.2%

The Indian economy is expected to grow at 7.5% in FY24, the World Bank said in its South Asia Development Update released on April 2. The latest adjustment marks an upward revision of 1.2% from the 6.3% that it had estimated in its October 2023 report.

According to the report, South Asia is expected to grow at 6% in 2024 because of robust growth in India and recoveries in Sri Lanka and Pakistan.

Highlighting India's crucial role in the South Asia region's economic landscape, the report underlined a projected output growth of 7.5% in FY 2023-24 before returning to 6.6% over the medium term, with activity in services and industry expected to remain robust.

South Asia is projected to be the fastest-growing economy in the world, with a growth rate of 6.1% in 2025, the report said.

"South Asia's growth prospects remain bright in the short run, but fragile fiscal positions and increasing climate shocks are dark clouds on the horizon. To make growth more resilient, countries need to adopt policies to boost private investment and strengthen employment growth," said Martin Raiser, World Bank Vice President for South Asia.

Bangladesh's output is expected to increase by 5.7% in FY 24/25, while Pakistan's will increase by 2.3% as business confidence improves, the report noted.

It further added that in Sri Lanka, output growth is expected to strengthen to 2.5% in 2025, with modest recoveries in reserves, remittances, and tourism.

Output growth in Maldives is expected to be 4.7% in 2024, a half-percentage point downgrade from earlier forecasts due to tourists shifting from high-end resorts to lower-cost guesthouses, the report said.