1. In June 2024, the World Bank released ‘Global Economic Prospects Report 2024’.  
2. India is predicted to remain the fastest-growing major economy globally with a projected GDP growth rate of 6.6% for FY25, according to the report.

Key Findings of the Report

Global

1. Growth Outlook: The global economy is stabilizing for the first time in three years, with GDP growth anticipated at 2.6% for 2024-25.

1. For FY26 and FY27, global growth is expected to be 2.7%, amid modest growth in trade and investment.

2. Projection for Global Inflation: The World Bank forecasts a slower moderation of global inflation, averaging 3.5% this year.

1. Central banks from the advanced and emerging market economies are expected to be cautious about easing monetary policy due to ongoing inflationary pressures.

3. Challenges to Global Growth:

1. Geopolitical tensions, trade fragmentation (divided into parts), higher interest rates, and climate-related disasters are hindering (hampering) growth.
2. Global cooperation is needed to safeguard trade, support green and digital transitions, provide debt relief, and enhance food security.

South Asian Region (SAR)

1. Growth Outlook:

1. South Asia's GDP growth is expected to drop from 6.6% in 2023 to 6.2% in 2024, mainly due to India's slowdown.
2. Bangladesh is expected to maintain robust growth, but at a slower pace.
3. Pakistan and Sri Lanka are expected to see strengthened economic activities.

2. Poverty Reduction:

1. Per capita income growth in South Asia will decrease from 5.6% in 2023 to 5.1% in 2024-25, then slightly rise to 5.2% in 2026.
2. This slowdown is due to weaker private consumption and fiscal adjustments that may reduce household income.

India

1. Economic Trajectory:

1. India is the largest economy in South Asia and a major contributor to regional growth.
2. India’s growth rate for FY24 is estimated at 8.2%, driven by industrial and services sectors, offsetting a slowdown in agriculture due to monsoon disruptions.

2. Fiscal and Trade Balances:

1. India's fiscal deficit relative to GDP is expected to decrease due to increased revenues from a broader tax base.
2. Narrowing trade deficits are contributing to overall economic stability in South Asia.

3. Factors Driving Growth:

1. Investment Growth: Strong public and private sector investments will likely sustain robust growth. Public investment will play a particularly significant role.
2. Private Consumption: Improved agricultural production and decreasing inflation rates will boost private consumption.
3. Government Expenditure: Government spending is expected to grow slowly as efforts focus on reducing current spending relative to GDP.

4. Increase in FDI Flows: In 2022, FDI flows to India increased by 10%. India became the third-largest recipient country for announced greenfield projects.
5. Government Spending and Infrastructure: Increased government spending on infrastructure projects like roads, railways, and renewable energy is driving fixed capital formation.

1. Gross Fixed Capital Formation (GFCF) is the total amount of money spent on investment.

6. Challenges in Accessing Financing: Developing countries, including India, face challenges in accessing financing due to increasing external debt and interest rates.
7. Labor Market Improvement:

1. India's labour market is showing improvement.
2. There is a higher labour force participation rate.
3. The unemployment rate is the lowest in a year at 7.1%.

8. Consumer Price Inflation:

1. Consumer price inflation in India is expected to decrease.
2. It is anticipated to align with the Central Bank's target range of 2 to 6 percent.

India’s GDP Forecast by MOSPI and RBI MOSPI Data: The Ministry of Statistics and Programme Implementation (MOSPI) provisionally reports an 8.2% GDP growth for the Financial Year 2023-24, up from 7.6% in FY23. RBI Forecast: The Reserve Bank of India (RBI) has revised India's real GDP forecast for FY25 to 7.20%. World Bank Establishment: Established in 1944 as the International Bank for Reconstruction and Development (IBRD) alongside the IMF. The IBRD later evolved into the World Bank. Purpose: The World Bank Group is a global partnership of five institutions dedicated to providing sustainable solutions that reduce poverty and promote shared prosperity in developing countries. UN Agency: The World Bank is a specialised agency of the United Nations. Members: Comprises 189 member countries, including India. Major Reports: Human Capital Index World Development Report Global Economic Prospects Report (usually published twice a year) Its Five Development Institutions: International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) International Finance Corporation (IFC) Multilateral Investment Guarantee Agency (MIGA) International Centre for Settlement of Investment Disputes (ICSID) Note: India is not a member of ICSID.

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