Gross domestic product (GDP) growth in India will slow to 6.6% in the financial year 2023-24 from 6.9% projected in the ongoing fiscal, according to the World Bank.
In its latest Global Economic Prospects report, the World Bank says growth in India is projected to slow to 6.9% in FY23, as the global economy and rising uncertainty will weigh on export and investment growth.
India, however, is expected to be the world's fastest growing major economy, the World Bank says.
In India, which accounts for three-fourths of the region's output, growth expanded by 9.7% on an annual basis in the first half of fiscal year 2022-23, reflecting strong private consumption and fixed investment growth, the World Bank says.
The forecast comes at a time when India's consumer price index (CPI) inflation stayed most of last year above the Reserve Bank's upper tolerance limit of 6%, prompting the policy rate to be raised by 2.25 percentage points between May and December.
The South Asian region is expected to remain the fastest growing emerging market and developing economy region, driven by India, the report says.
The outlook remains comparatively resilient in the South Asian region, due to limited spillovers to India from a projected global slowdown, but growth is nonetheless expected to decelerate notably in 2023, it adds.
The World Bank expects global growth in 2023 to slow to 1.7% from 3% expected six months ago. Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia's invasion of Ukraine.
Given fragile economic conditions, any new adverse development—such as higher-than-expected inflation, abrupt rises in interest rates to contain it, a resurgence of the COVID-19 pandemic, or escalating geopolitical tensions—could push the global economy into recession, the World Bank warns. This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95% of advanced economies and nearly 70% of emerging market and developing economies.
Over the next two years, per-capita income growth in emerging market and developing economies is projected to average 2.8%—a full percentage point lower than the 2010-2019 average, says the World Bank.
"The crisis facing development is intensifying as the global growth outlook deteriorates," says World Bank Group President David Malpass. "Emerging and developing countries are facing a multi-year period of slow growth driven by heavy debt burdens and weak investment as global capital is absorbed by advanced economies faced with extremely high government debt levels and rising interest rates."
Growth in advanced economies is projected to slow from 2.5% in 2022 to 0.5% in 2023. Over the past two decades, slowdowns of this scale have foreshadowed a global recession. In the United States, growth is forecast to fall to 0.5% in 2023.
In China, growth is projected at 4.3% in 2023—0.9 percentage point below previous forecasts, the World Bank notes.