Economic Outlook for South Asia: World Bank Lowers Growth Forecast

The World Bank has revised its growth forecast for India and South Asia, citing global economic weakness and policy uncertainty. India's growth is projected to slow from 6.3% in FY25/26. The IMF also lowered India's GDP forecast to 6.2%. Regional growth is expected to be 5.8% by 2025.

The World Bank announced a revised forecast for India's economic growth, lowering expectations from 6.7% to 6.3% for the fiscal year 2025-26. This adjustment reflects global economic fragility and domestic policy uncertainty impacting both private investment and public expenditures.

Similarly, the International Monetary Fund adjusted its expectations for India's GDP, setting it at 6.2% from its earlier projection of 6.5%. The World Bank's report indicates that while initiatives like tax cuts are underway to boost public investments, challenges persist with global trade policies and slowing international markets.

In South Asia, overall growth predictions have been downgraded, with regional growth expected to slow to 5.8% by 2025. Persistent risks due to global economic instability and domestic fiscal constraints are areas of concern, emphasizing the need for enhancing domestic revenue mobilization to navigate potential future shocks.

(With inputs from agencies.)