The Indian economy has demonstrated resilience despite a challenging external environment and is set to grow at 6.9% in 2022-23, the World Bank said on Tuesday, raising its forecast of 6.5% growth made in October.
The multilateral agency, however, lowered its India growth forecast for next fiscal to 6.6% from 7% made earlier.
While the deteriorating external environment will weigh on India’s growth prospects, the economy is relatively well positioned to weather global spill overs compared to most other emerging markets, the World Bank said in its latest India development update titled ‘Navigating the Storm.
The impact of a tightening global monetary policy cycle, slowing global growth and elevated commodity prices will mean that the Indian economy will experience lower growth in 2022-23 compared to 2021-22, World Bank said in a statement.
Despite these challenges, India is expected to register strong GDP growth and remain one of the fastest growing major economies in the world, due to robust domestic demand, the statement said.
The World Bank has revised its 2022-23 GDP forecast upward to 6.9 %p from 6.5 % (in October 2022), considering a strong outturn in India in the September quarter of the 2022-23 financial year.
"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," the statement said quoting Auguste Tano Kouame, World Bank's Country Director in India. “However, continued vigilance is required as adverse global developments persist," said Kouame.
World Bank said that rapid monetary policy tightening in advanced economies has already resulted in large portfolio outflows and depreciation of the rupee while high global commodity prices have led to a widening of the current account deficit.
However, India’s economy is relatively insulated from global spill overs compared to other emerging markets, the statement said. This is partly because India has a large domestic market and is relatively less exposed to international trade flows.