New Delhi: India remains among the fastest-growing major economies in the world despite the global slowdown – likely to clock 6.6 per cent in FY27 — as higher energy prices caused by the Middle East conflict and supply chain disruptions weigh on economic activity.
According to the latest World Bank’s latest economic update, despite significant downside risks stemming from the conflict, the economy’s strong macroeconomic fundamentals and policy buffers offer some insulation.
Substantial foreign reserves, low inflation, predominantly rupee-denominated public debt, a healthy financial sector, and trade diversification efforts play a major role in providing resilience from external headwinds.
Boosting private sector-led growth will be critical to strengthening economic resilience and supporting more young people to enter the workforce, says Paul Procee, World Bank Acting Director for India.
To achieve Viksit Bharat, a predictable, business-enabling environment will help to unlock investment and create jobs at scale in priority sectors like energy and infrastructure, manufacturing, tourism, healthcare, and agribusiness, Procee adds.
The latest South Asia Economic Update projects growth in South Asia to slow to 6.3 per cent in 2026 — from 7 per cent in 2025 — due to disruptions in global energy markets.
Despite the slowdown, South Asia continues to grow faster than other emerging markets and developing economies. Growth is expected to recover to 6.9 per cent in 2027.
Global growth could be lowered by 0.3 to 0.4 percentage point in a baseline scenario, with an early end to the war, and by as much as 1 percentage point if it endures.
Global inflation could increase by 200 to 300 basis points, with a much higher impact – of up to 0.9 percentage point – if the war continues.
The World Bank report also includes an in-depth analysis of the region’s use of industrial policy — the range of policy tools governments are using to shape what an economy produces, rather than leaving it to markets alone.
Governments around the world are increasingly using industrial policy, and in South Asia industrial policies are implemented at roughly twice the rate of other emerging economies. But these measures have delivered mixed results in South Asia, said the report.
(IANS)
