World Bank raises India FY23 GDP forecast to 6.9% from 6.5% in October

The World Bank raised its gross domestic product (GDP) growth forecast for India in the current financial year (FY23) to 6.9 per cent from 6.5 per cent, on the back of the economy’s relative resilience to external headwinds, and the ‘strong outturn’ in the July-September quarter.

This comes after a spate of growth downgrades earlier by banks and multilateral institutions. The World Bank had itself cut India’s FY23 GDP forecast to 6.5 per cent from 7.5 per cent in October.

“India’s economy has been remarkably resilient to the deteriorating external environment, and strong macroeconomic fundamentals have placed it in good stead compared to other emerging market economies,” Auguste Kouame, World Bank’s country director in India, said in the agency’s latest India Development Update on Tuesday.

The reason for India’s insulation from global spillovers is its large domestic market, which is relatively less exposed to international trade flows. The report said India’s external position has also improved considerably over the past decade.

“Policy reforms and prudent regulatory measures have also played a key role in developing resilience in the economy,” it stated.

India’s GDP expanded 6.3 per cent in the September quarter, slower than the 8.4 per cent growth a year ago, as factory output shrank and the base effect waned, official data last week showed. However, it was better than analyst expectations, which was one of the reasons cited by the World Bank for its latest growth upgrade.