The Indian economy is expected to expand to 7% in the next financial year, before settling back to 6.1% in FY 24-25
The Indian economy is expected to expand to 7% in the next financial year, before settling back to 6.1% in FY24-25
The World Bank has projected that India will grow by 6.5% in the current fiscal (FY22-23), following a growth of 8.7% in the financial year ended March 31.
Estimates for the current year were revised down one percentage point from June Due to constant pressure. The Indian economy is expected to accelerate to 7.0% in the next fiscal, before settling back to 6.1% in FY24-25.
The numbers were released as part of the World Bank’s twice-annual South Asia Economic Focus, titled ‘Coping with Shocks: Migration and the Road to Resilience’. The World Bank ahead of the IMF’s annual meeting in Washington DC.
with Sri Lanka’s economic crisisdestructive floods in pakistanAnd as Ukraine recovers from the war-ravaged pandemic, recovery in the region will be uneven, with economies that are more services-led (India, Nepal and the Maldives) “maintaining a reasonable recovery trend despite headwinds”. expects.
Afghanistan, Sri Lanka and Pakistan are at greater risk and poverty will increase in 2022.
The reason for the slowdown in India’s growth during the current financial year as compared to last year was that most of the COVID recovery happened last year, the report said. its effect Russo-Ukraine WarGlobal monetary tightening, higher commodity prices and interest rates impacting domestic demand (particularly private consumption in FY 2023-24), are contributing to this slowdown.
Manufacturing and services have been expanding in India since January, and growing faster than the rest of the world. With the easing of COVID restrictions, economic activity had picked up, as was demand in contact-intensive areas.
Production in the April-June period this year had grown by an estimated 13.5% (YoY), however, a contraction relative to the previous quarter.
The report noted that services and construction expanded the fastest on the production side, and private demand grew year-on-year, but this was mainly due to a lower base effect from the second quarter of 2021 when the economy was hit by a delta wave. was walking under. of covid.
Though India’s growth forecast is above the South Asian average, there is weakness in employment and supply chain, the report said, adding that the supply chain has improved only marginally since June this year with delays. While India’s economy-wide employment index is improving on a monthly basis, it is doing so at a slower pace than the rest of the world (except Asia).
While private consumption in India grew overall in the second quarter of 2022, the recovery has been uneven across income groups, according to the World Bank. High-income households’ consumption of contact-intensive services and consumer goods improved, but for rural and low-income households, consumption was weaker. The return of migrant workers to their workplaces has also been slow, affecting household income in cases where migrants are sending money home.
“Pandemics, sudden fluctuations in global liquidity and commodity prices, and extreme weather disasters were once tail risks. But all three have come in rapid succession over the past two years and are testing the economies of South Asia,” said Martin Raiser, World Bank vice president for the South Asian region.
“In the face of these shocks, countries need to build strong fiscal and monetary buffers, and redeploy scarce resources to strengthen resilience to protect their peoples,” he said.
Overall, South Asia is projected to grow at 5.8% for the current calendar year and the next two years, excluding Afghanistan, from 7.8% in 2021. Sri Lanka’s forecast is particularly dire – a contraction of 9.2% this year in the calendar year and a contraction of 4.2% next year with its first growth projected to increase by 1% in 2024.