India’s economic condition currently appears stable, but constantly evolving policies in global trade and rising questions with major partners like the United States will shape the economy’s direction in the coming months.
According to reports, increasing trade tensions and policy uncertainty are expected to limit global growth to just 2.3% this year, the slowest pace since 2008 (excluding global recessions). In January, the estimate was 2.7%. The World Bank has warned that if decisive action is not taken promptly, there could be a major impact on human living standards.
According to the World Bank’s latest Global Economic Prospects report, heightened trade tensions and policy uncertainty are expected to drive global growth down this year to its slowest pace since 2008 outside of outright global recessions.
The turmoil has resulted in growth forecasts being cut in nearly 70 per cent of all economies-across all regions and income groups, it said.
After unexpectedly weak growth of 6 per cent in 2024, activity in South Asia (SAR) is decelerating amid rising global trade barriers, heightened policy uncertainty, and financial market volatility, it said.
World Bank On India GDP
World Bank on Tuesday pegged India’s economic growth projection at a lower level of 6.3 per cent for 2025-26 due to pressure on exports emanating from global uncertainties, though the country will remain the fastest growing major global economy.
In April, the World Bank had lowered India’s growth projection for 2025-26 to 6.3 per cent from its January forecast of 6.7 per cent.
Regarding India, the report said the growth moderated in FY2024-25 (April 2024 to March 2025), partly reflecting a deceleration in industrial output growth.
However, growth in construction and services activity remained steady, and agricultural output recovered from severe drought conditions, supported by resilient demand in rural areas.
“India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.3 per cent in FY2025-26,” it said.
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, the World Bank said.
Last week, the Reserve Bank on India retained GDP growth projections for the current fiscal at 6.5 per cent, saying the Indian economy presents a picture of strength, stability and opportunity in the backdrop of global uncertainty.
World Bank expects China to grow at 4.5 per cent in 2025 and 4 per cent next year.