Escalation of war may knock off next year’s growth forecast: World Bank chief economist

MARRAKECH(MOROCCO): If the conflict in Middle East spreads or other risks materialise, all bets will be off for next year’s growth forecasts, World Bank chief economist Indermit Gill cautioned. “By June this year, we had added risks to economic growth from stubborn inflation, financial instability, and intensifying conflict. With the Gaza war, one of these risks has materialised this week,” Gill told ET. “That means the expectations we had just last week for global GDP growth are probably too rosy.”

Gill pointed out that all the forecasts are conditional on risks not materialising, so they are inclined to be optimistic.

The World Bank has forecast India to grow by 6.3% for FY24, projecting strong investment to drive growth, in its latest update released last week. South Asia is expected to grow by 5.8% this year — higher than any other developing country region in the world.


On Tuesday, the International Monetary Fund (IMF) also raised India’s growth forecast for FY24 by 0.2 percentage points to 6.3%. Its forecast was frozen before the terror attack on Israel and subsequent developments.

In early 2021, the main risks that most concerned us were Covid outbreaks, trade fragmentation, public debt distress, and climate-caused disasters, Gill said. But the June global prospects report, which pegged world GDP growth at 2.1% added more risks to the list, he added.

(The reporter is in Marrakech at the invitation of CII)