Indian economy to grow at 6.3% in FY24: World Bank

India's growth in the first half of 2023 was supported by a strong expansion of investment and, on a sectoral level, continued strength of services

October 4, 2023

South Asia is expected to grow 5.8% this year—higher than any other developing country region in the world

Inflation in India is expected to decrease gradually as food prices normalise and government measures help increase the supply of critical commodities

The effects of slowing global demand and rising interest rates will be mitigated by India’s low external debt and the healthy balance sheets of its financial and corporate sectors

India’s services Purchasing Managers Index (PMI) reached 62.3 in August, nearly 10 points above the global index

The Indian economy is projected to grow at a rate of 6.3% in the current financial year, driven by investment and domestic demand, according to a recent World Bank report.

The World Bank said that in India, robust output growth in the first half of 2023 was supported by a strong expansion of investment and, on a sectoral level, continued strength of services. Government infrastructure projects have supported momentum in the construction sector, which has grown at year-over-year rates of around 10% in recent quarters.

In India, which accounts for the bulk of the South Asia region, growth is expected to remain robust at 6.3% in 2023-24, as stated in the India Development Update of the World Bank.

The report said inflation is expected to decrease gradually as food prices normalise and government measures help increase the supply of critical commodities.

The World Bank said South Asia is expected to grow 5.8% this year—higher than any other developing country region, but slower than its pre-pandemic pace and not fast enough to meet its development goals.

Relative to the spring forecast, growth in 2023 has been upgraded by 0.2 percentage points due to stronger-than-expected data in India.

Although India’s post-pandemic economic rebound is fading, growth is expected to remain stronger than in other large emerging markets and developing economies (EMDEs). Output is forecast to grow 6.3% in FY2023-24 and 6.4% in FY2024-25—roughly equal to the estimated pace of India’s potential growth, the World Bank said.

As per the report, the effects of slowing global demand and rising interest rates will be mitigated by India’s low external debt and the healthy balance sheets of its financial and corporate sectors.

Growth of merchandise exports is expected to slow due to weak foreign demand growth, although robust services exports will offset this.

According to the report, India’s services Purchasing Managers Index (PMI) reached 62.3 in August, nearly 10 points above the global index.

Employment indicators have been weaker, however, suggesting that with appropriate policies, the country’s economic growth could deliver more robust job creation, it said.

Source: Financial Express

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