According to the World Bank’s ‘Global Economic Prospects’ report, “In the next two fiscal years, beginning in FY2026/27, growth is anticipated to rebound to an average of 6.6 percent per year, bolstered by strong service sector activity which will aid export growth.”

In FY2024/25 (April 2024 to March 2025), India’s growth has moderated, influenced in part by a slowdown in industrial output. However, the report highlights that construction and service sectors showed stable growth, while agricultural production improved following previous droughts, driven by ongoing demand in rural areas.

Global trade tensions and policy uncertainties are projected to dampen global growth this year, marking the slowest pace since 2008, aside from periods of outright recession. The challenges have led to reduced growth forecasts in nearly 70 percent of economies worldwide, across all regions and income brackets.

The World Bank projected, “Global growth is expected to slow to 2.3 percent in 2025, a decrease of nearly half a percentage point from earlier expectations.” While a global recession is not anticipated, if the forecasts hold true, the average global growth during the early 2020s will be the slowest of any decade since the 1960s.

Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics, remarked, “Outside of Asia, the developing world is becoming a development-free zone.” He noted a steady decline in growth rates for developing economies, dropping from 6 percent annually in the 2000s to 5 percent in the 2010s, to below 4 percent in the 2020s. This decline mirrors the downturn in global trade, which has seen averages drop from 5 percent in the 2000s to about 4.5 percent in the 2010s, and under 3 percent in the current decade.

Investment growth has also faltered, while debt levels have soared to unprecedented heights. The report suggests that amidst escalating trade barriers, developing economies should pursue a broader liberalization strategy, forging strategic trade and investment partnerships while diversifying trade—particularly through regional agreements.

Given constrained government resources and increasing development demands, policymakers are advised to focus on enhancing domestic revenue mobilization, prioritizing fiscal spending for vulnerable populations, and reinforcing fiscal frameworks, as recommended by the report.