New Delhi: The World Bank now predicts that the Indian economy will grow at 7.5% in 2024, an increase of 1.2% from its earlier forecast. The bank’s latest update on South Asia’s development suggests a strong economic outlook for the region, with South Asia expected to grow by 6.0% in 2024, led by India and with recoveries in Pakistan and Sri Lanka.
The report credits India’s role in the region’s economic growth. It predicts India’s output growth to be 7.5% in FY23/24, then moderate to 6.6% in the medium term. Despite challenges like high inflation and trade restrictions, Bangladesh is expected to see a rise in output by 5.7% in FY24/25.
Pakistan’s economy is expected to bounce back, with a growth rate of 2.3% in FY24/25, after shrinking in the previous fiscal year. Similarly, Sri Lanka is forecasted to grow by 2.5% in 2025, fuelled by recoveries in reserves, remittances, and tourism.
There are worries about financial stability and climate challenges. Martin Raiser, World Bank Vice President for South Asia, stressed the importance of policies to boost private investment and create more jobs for better resilience.
Franziska Ohnsorge, World Bank Chief Economist for South Asia, highlighted that the region isn’t fully benefiting from its demographic advantage, which could raise output by 16% if addressed.
India performed well economically in 2023’s last quarter, driven by more investment and government spending. In February, its Purchasing Managers Index (PMI) was 60.6, higher than the global average. Inflation stayed within the Reserve Bank of India’s target.
Although growth might slow down in the coming years due to reduced investment, India’s service and industry sectors are expected to stay strong. Over time, the government aims to decrease fiscal deficit and debt with ongoing growth and consolidation efforts.
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