India’s economy is expected to expand by 8.3% in the current fiscal 2021-22, the World Bank says in its latest Global Economic Prospects report. The GDP growth projection remains unchanged from the Bank’s last June’s forecast. The growth forecast for FY 2022-23 and FY 2023-24 are 8.7% and 6.8% respectively.
The report says that even though the recovery is yet to become broad-based, Indian economy should benefit from the resumption of contact-intensive services, and ongoing but narrowing monetary and fiscal policy support. The growth projections for the next two years are based on “an improving investment outlook with private investment, particularly manufacturing, benefiting from the production-linked incentive (PLI) scheme, and increases in infrastructure investment,” the report said.
The World Bank also says that the growth outlook will be supported by ongoing structural reforms, a better-than-expected financial sector recovery, and measures to resolve financial sector challenges despite ongoing risks.
However, overall global economic growth is likely to slow down due the emergence of new variants of Covid-19. “After rebounding to an estimated 5.5% in 2021, global growth is expected to decelerate markedly to 4.1% in 2022, reflecting continued Covid-19 flare-ups, diminished fiscal support, and lingering supply bottlenecks. The near-term outlook for global growth is somewhat weaker, and for global inflation notably higher, than previously envisioned, owing to pandemic resurgence, higher food and energy prices, and more pernicious supply disruptions,” the report said.
It notes that global growth is projected to soften further to 3.2% in 2023, as pent-up demand wanes and supportive macroeconomic policies continue to be unwound. “Although output and investment in advanced economies are projected to return to pre-pandemic trends next year, in emerging market and developing economies (EMDEs) — particularly in small states and fragile and conflict-afflicted countries — they will remain markedly below, owing to lower vaccination rates, tighter fiscal and monetary policies, and more persistent scarring from the pandemic,” the report states.
The World Bank report also states that Covid-19 pandemic has raised global income inequality, partly reversing the decline that was achieved over the previous two decades. It calls for a comprehensive package of policies to steer the global recovery onto a more equitable development path.