World Bank maintains India's FY25 GDP growth forecast at 7% amid strong agricultural production, employment growth

Propelled by higher agricultural production and robust employment growth from policy initiatives, spurring private consumption, the World Bank retained India's gross domestic product (GDP) growth forecast for FY25 at 7%, as projected last month.

According to the multilateral lender, India's growth rate in FY25 will be the second highest among South Asian nations after Bhutan but it would regain the fastest growing economy tag in the next fiscal year with 6.7% growth.

Bhutan's economy is expected to grow 7.2% in fiscal 2024-25 (July-June). The Reserve Bank of India on Wednesday retained its real GDP forecast at 7.2% for FY25.


"Investment growth is expected to moderate from a high base," the World Bank said in its October South Asia Development Update, Women, Jobs and Growth.

The estimate aligns with India's pre-pandemic (FY17-19) average growth rate and outpaces most other major emerging markets and developing economies (EMDEs).

While the GDP growth rate remains unchanged from the World Bank's September update, it has increased by 0.4 percentage point from the April forecast of 6.6%.

The multilateral lender also upgraded the economic outlook for all South Asian countries, except for Bangladesh and the Maldives.

South Asia's output is expected to grow by 6.2% in 2025, fuelled by strong private consumption in India, and increased tourism and hydropower exports in Bhutan, Nepal, and Sri Lanka.

The World Bank forecast India's fiscal deficit to reduce by 0.7 percentage point of GDP in 2024-25, reaching 7.5% of GDP due to "higher revenues from improved compliance with the Goods and Services Tax (GST) and a broadening of the personal income tax base".

India is likely to attract global investors "seeking locations with low geopolitical risks and strong economic fundamentals," it said.