World Bank Forecasts Slowdown for India's Economy Amid Global Uncertainty

The World Bank has revised India's growth forecast for 2025-26 down to 6.3% due to global economic challenges and policy uncertainties. The growth forecast for 2024-25 was also lowered to 6.5%. South Asia faces downgraded growth prospects, with the World Bank urging reforms to tackle fiscal and climate vulnerabilities.

The World Bank has readjusted its growth forecast for India, projecting a decline from 6.5% in 2024-25 to 6.3% in 2025-26. This decision comes amidst global economic weaknesses and potential policy uncertainties that could counterbalance the positive effects of monetary easing and regulatory improvements in India.

The Reserve Bank of India has similarly revised its growth projections for the 2025-26 fiscal year, lowering them from 6.7% to 6.5%. This change is attributed to uncertainties stemming from trade tensions, notably reciprocal tariffs issued by the US, as highlighted in the World Bank's recent "South Asia Development Update."

The World Bank's biannual evaluation suggests that enhancing domestic revenue mobilization could stabilize fiscal conditions in South Asia, increasing resilience against future economic shocks. The region's projected growth is expected to decrease to 5.8% in 2025, before rising slightly to 6.1% in 2026, due to ongoing risks and limited economic buffers.