World Bank Cuts India's Growth to 6.3 PC as Global Economy Slows
India’s projected merchandise trade deficits are expected to be only partly offset by surpluses in the services trade. In India, inflation will remain contained over the forecast horizon, assuming normal seasonal conditions.
Chennai: Due to a substantial rise in trade barriers and uncertain global policy environment, the World Bank has lowered the global growth to 2.3 per cent in 2025 against 2.7 per cent projected in January. India’s growth too has been revised down to 6.3 per cent against 6.7 per cent estimated earlier.
Global growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment. Growth is expected to weaken to 2.3 percent in 2025 against 2.8 per cent last year, with deceleration in most economies. This would mark the slowest rate of global growth since 2008, aside from outright global recessions. The growth rate for 2026 too has been lowered to 2.4 per cent against 2.7 per cent projected in January.
The US, which has triggered the tariff war, too will see its growth coming down to 1.2 per cent against 1.7 per cent predicted earlier. The growth for next year also has been lowered to 1.4 per cent.
India will see its growth slowing down to 6.3 per cent in FY25 against 6.7 per cent predicted earlier. The growth for next year also has been brought down to 6.5 per cent against 6.7 per cent estimated in January.
India will have the fastest growth rate among the world’s largest economies at 6.3 per cent. Nevertheless, the forecast for growth in FY2025/26 has been downgraded by 0.4 percentage point relative to January projections, with exports dampened by weaker activity in key trading partners and rising global trade barriers. Investment growth is expected to slow, primarily reflecting a surge in global policy uncertainty.
Along with other emerging markets, India too will see consumption growth moderating.
In India there is a slowdown in investment on the demand side and a deceleration in industrial output growth on the supply side. However, growth in construction and services activity remained steady, and agricultural output recovered from earlier severe drought conditions, supported by resilient demand in rural areas.
Expansion of private sector credit by commercial banks has slowed in India, mainly reflecting the central bank’s efforts to curb risks from unsecured credit.
India’s projected merchandise trade deficits are expected to be only partly offset by surpluses in the services trade. In India, inflation will remain contained over the forecast horizon, assuming normal seasonal conditions.
