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Global Economic Prospects Report

  • 13 Jun 2025

On 10th June, 2025, the World Bank released its Global Economic Prospects report, retaining India’s Gross Domestic Product (GDP) growth forecast at 6.3% for 2025–26, despite global uncertainty impacting investments and exports.

Key Points

  • India Remains Fastest Growing Major Economy: India is projected to grow at 6.3% in 2025–26, maintaining the top spot among large economies.
  • Forecast Trimmed: This is a 0.4 percentage point downgrade from earlier World Bank projections made in January 2025.
  • Growth Drivers and Challenges: Robust services and a recovery in agriculture are offset by weaker industrial output, slower investments, and declining exports.
  • Global Headwinds: Heightened trade tensions, tariff barriers, and global policy uncertainty have slowed global growth to 2.3% in 2025—the lowest outside global recessions since 2008.
  • RBI’s Role: The Reserve Bank of India cut the repo rate by 50 basis points in June 2025 (total 100 bps cut in 2025 so far), aiming to boost domestic demand and private investment.
  • Inflation and Fiscal Trends: Retail inflation is projected to average 3.7% in FY26. Fiscal consolidation is expected to reduce India’s debt-to-GDP ratio from 56.1% in FY26 to around 50% by FY31.
  • Global Context: The World Bank noted that developing economies (outside Asia) are becoming "development-free zones" due to weakening trade and investment trends.