World Bank cuts India's growth forecast to 6.5%

The World Bank on Thursday downgraded India's GDP or gross domestic product to 6.5% for the fiscal year 2022-23 from an earlier estimate of 7.5%. In the previous year, the Indian economy grew by 8.7%.

In its South Asia Economic Focus report released on Thursday, the World Bank said, "The spillovers from the Russia-Ukraine war and global monetary policy tightening will continue to weigh on India's economic outlook."

The World Bank, however, said that India is recovering stronger than the rest of the world.

"The Indian economy has done well compared to the other countries in South Asia, with relatively strong growth performance... bounced back from the sharp contraction during the first phase of Covid," Hans Timmer, World Bank chief economist for South Asia, told news agency PTI.

Timmer added the Indian economy has done especially well in the services sector and especially service exports.

"But we have downgraded the forecast for the fiscal year that just started and that is largely because the international environment is deteriorating for India and for all countries. We see kind of an inflection point in the middle of this year, and first signs of slowing across the world," the top World Bank official said.

This is the third time the World Bank revised its GDP growth forecast for India in FY23. In June, it had slashed its forecast to 7.5%. Earlier in April, it had trimmed the forecast from 8.7% to 8%.

Recently, the Reserve Bank of India (RBI) cut the economic growth projection for the current fiscal to 7% from the 7.2% estimated earlier on account of extended geopolitical tensions and aggressive monetary policy tightening globally.