The World Bank on January 10 projected the Indian economy to grow at a robust 6.6 per cent in 2023-24 (FY24), slowing down from an estimated 6.9 per cent in 2022-23 (FY23).
Key points
- In its Global Economic Prospects, the World Bank said global growth may decelerate sharply in 2023 to its third weakest pace in nearly three decades.
- The global economy has been projected to grow by 1.7 per cent in 2023, while the Euro Area and the US are expected to grow at zero per cent and 0.5 per cent respectively during the year.
- China’s growth has been projected to pick up to 4.3 per cent in 2023. In 2022, China is expected to have grown at 2.7 per cent in 2022 — the weakest pace since the mid-1970s, except the pandemic year of 2020.
- The World Bank report also noted that rising interest rates in developed economies like the United States and Europe will attract investment capital from poorer countries, thereby depriving them of crucial domestic investment.
- At the same time, the report said, those high interest rates will slow growth in developed countries at a time when Russia’s invasion of Ukraine has kept world food prices high.
- The report cautions that the world economy is “perilously close” to falling into recession. “Further negative shocks — such as higher inflation, even tighter policy, financial stress, deeper weakness in major economies, or rising geopolitical tensions — could push the global economy into recession.
- This would mark the first time in more than 80 years that two global recessions have occurred within the same decade.
What is a recession?
- A recession is a significant, widespread, and prolonged downturn in economic activity.
- A common rule of thumb is that two consecutive quarters of negative gross domestic product (GDP) growth mean recession, although more complex formulas are also used.
