The World Bank on Tuesday cut India’s economic growth forecast for the current fiscal to 7.5%, as rising inflation, supply-chain disruptions and geopolitical tensions dampen recovery.
This is the second time the World Bank has revised its GDP growth forecast for India in the current fiscal FY23. In April, it had trimmed the forecast from 8.7% to 8%. The latest estimate compares with the 8.7% expansion in FY22.
“In India, growth is forecast to edge down to 7.5% in the fiscal year 2022-23, with headwinds from rising inflation, supply-chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic,” the World Bank said in the latest issue of the Global Economic Prospects report.
Growth, it said, would also be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2 percentage point downward revision of growth from the January projection, the bank added.
“Growth is expected to slow further to 7.1% in 2023-24 back towards its longer-run potential,” it noted.
According to the report, growth in India slowed in the first half of 2022 as activity was disrupted both by a surge in COVID-19 cases, accompanied by more-targeted mobility restrictions and by the war in Ukraine. The recovery is facing headwinds from rising inflation, it said.