India Demonstrates Economic Resilience Amid Global Challenges: World Bank Report 2025

India Demonstrates Economic Resilience Amid Global Challenges: World Bank Report 2025

The latest Global Economic Prospects Report from the World Bank offers an overview of the global economy for the first quarter of the 21st century (refer to the infographic).

Key Highlights:

• Growing Influence of EMDEs: Emerging Market and Developing Economies (EMDEs), led by the EM3 nations—China, India, and Brazil—have significantly expanded their share in the global economy from 2000 to 2025.

• India's Growth Leadership: India remains the fastest-growing economy, with a projected annual growth rate of 6.7% through FY26–FY27, slightly lower than the 7% achieved in 2022.

Factors Contributing to India's Economic Resilience:

• Strong Sectoral Performance:

  • Services: The services sector is poised for continued expansion, with rising service exports enhancing trade integration in South Asia since 2000.
  • Manufacturing: The manufacturing sector is strengthening, bolstered by government initiatives aimed at improving logistics and implementing tax reforms.

• Solid Economic Foundation:

  • Fiscal Health: Shrinking fiscal deficits and rising tax revenues.
  • Investment Outlook: Investment growth is expected to remain steady, supported by growing private investment, healthy corporate balance sheets, and more favorable financing conditions.
  • Consumption Outlook: Private consumption growth is expected to benefit from a stronger labor market, expanding credit, and lower inflation, though government consumption growth is likely to stay limited.

The report highlights challenges such as increasing protectionism, geopolitical tensions, rising debt burdens, and the financial impacts of climate change. To succeed, India will need to adopt focused policies aimed at boosting investment, productivity, and macroeconomic stability while managing external pressures effectively.

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