India Shines in a Slowing World: World Bank’s 2025 Economic Outlook
Source: World Bank June 2025 GEP Report
India takes centre stage in the World Bank’s June 2025 Global Economic Prospects (GEP) report, standing tall in the middle of a global slowdown. Here’s a deep dive into the key takeaways—especially for India—with expert context, a visual trend, and outlook.
Contents
Global Outlook: Sluggish, but Stable
- Global GDP growth is projected to lag at 2.3 % in 2025, only recovering marginally to about 2.5 % by 2027—marking the slowest non-recession growth run since the 1960s.
- The weak trend is attributed to heightened trade barriers, policy uncertainty, and inflation pressures.
- Among developed economies, about 60% are expected to see slower growth this year, averaging 3.8%—a full percentage point lower than the 2010s average.
India: A Bright Spot in a Dim World
Growth Forecasts & Revisions
- FY25 Growth: An impressive 8.2%, driven by a resurgent manufacturing sector and robust consumer demand.
- FY26 Forecast: Revised down to 6.3% from the January projection of 6.7%, due to moderating private investment and global volatility.
- FY27 Outlook: Slight dip anticipated, to around 6.5%, still keeping India at the top of major economies.
Why India Stands Out
- Largest major economy growth: India is expected to remain the fastest-growing among major economies like China, the US, EU, and Japan .
- Structural resilience: Domestic-driven services and manufacturing sectors, alongside expansion-driving schemes, have shielded India from global headwinds—unlike China and the US, which are slowing.
- Policy and investment tailwinds: Government-led infrastructure upgrades, tax simplifications, and credit access for households continue to be accessible & simplified.
Source: World Bank June 2025 GEP Report
Growth Drivers
- Manufacturing revival due to government incentives (PLI schemes).
- Service sector boom, especially IT and financial services.
- Domestic demand remains strong amid controlled inflation.
Key Risks
- Private investment still recovering.
- Global demand slowdown may affect exports.
- Inflationary pressures and fiscal consolidation challenges
Policy Recommendations
- Stimulate private capital expenditure.
- Improve labour participation and skilling.
- Maintain fiscal discipline while ensuring social sector investments.
- Diversify export markets to hedge global trade uncertainties.
Summary:
The World Bank’s June 2025 Global Economic Prospects report positions India as the world’s fastest-growing major economy, projecting an impressive 8.2% growth for FY 2024–25. While global growth remains sluggish amid trade tensions and inflationary pressures, India stands out due to strong domestic demand, manufacturing resurgence, and structural policy reforms. The report, however, cautions about moderating private investment and global uncertainties that could impact India’s medium-term outlook.
