Explained: Why World Bank upgraded India's economic forecast for FY23



NEW DELHI: The World Bank on Tuesday revised upwards its GDP growth forecast from 6.5% for India to 6.9% for 2022-23, saying the country was showing higher resilience to global shocks.

In its latest India Development Update, the World Bank said the revision was due to higher resilience of the Indian economy to global shocks and better-than-expected second quarter numbers.

This comes as a breather since the World Bank had been lowering India's FY23 growth forecast in its World Economic Outlook report since the last 3 times.

In October, it had slashed India's GDP forecast by one percentage point to 6.5% from its June estimate of 7.5%, citing impact of ongoing war in Ukraine, rising global interest rates and high inflation.

This is the first upgrade of India's growth forecast by any international agency amid the global turmoil.

Here's what prompted World Bank to revise growth forecast:







* Fastest growing economy

Amid exsting global challenges like tightening monetary policy cycle, slowing growth and elevated commodity prices, Indian economy will experience lower growth in 2022-23 financial year compared to 2021-22.

Growth in first half of FY22-23 was supported by solid domestic demand and despite a challenging external environment, the report said.




* More insulated

The report titled 'Navigating the Storm' highlighted that Indian economy is relatively more insulated from global spillovers than other emerging markets.

"India is less exposed to international trade flows and relies on its large domestic market," it said.

High frequency indicators show that private consumption and investment continued to grow strongly in October.

Electricity generation and freight traffic remained firmly above pre-pandemic levels. Similarly, passenger vehicle sales and air passenger traffic grew sharply (albeit still below pre-pandemic levels).





* Sensex, Nifty at record high

After the slump witnessed in the initial days of Russia-Ukraine war, both sensex and Nifty have now bounced back driven by better-than-expected corporate earnings in the first quarter of

Besides, the return of foreign portfolio investors has also boosted investor sentiments.

* Sensex, Nifty都创历史新高



* Financial sector growth

India’s financial sector has also deepened considerably over the years but is still recovering from a long period of stress and thus lags relative to other EMEs in terms of capital adequacy and NPL ratios.

Corporate and household debt has declined and remains benign but public debt has increased sharply, as a share of GDP — driven by the pandemic.




* Boost in private consumption, investment

The report noted that private consumption and investment grew strongly, despite high inflation and borrowing costs.



* Rise in services output

The World Bank report also noted that the services sector expanded 9.3% year-on-year as compared to 10.5% in Q2 of FY23 on back of solid growth in business services, contact-intensive segments of retail trade, transport, hotels and restaurants, and public administration.



* Rupee better placed

Indian Rupee has fared relatively well in 2022 in comparison to other emerging market peers, senior World Bank economist Dhruv Sharma said.

"The rupee has depreciated just about 10% over the course of this year. But relative to many other emerging market peers, India hasn't fared that badly".

The rupee had plunged to a record low of 83 against the US dollar in mid-October, triggered by tightening monetary policy by the US Federal Reserve and central banks in other advanced economies. However, it has now come off lows and is currently around 82 against the US dollar.


世界银行高级经济学家Dhruv Sharma表示,跟其他新兴市场国家相比,印度卢比在2022年的表现相对较好。



* Better than expected exports

Despite a challenging external environment, exports performed better than expected.

However, exports are susceptible to a global growth slowdown - the income elasticity of exports is high, which implies that the global demand for India’s goods and services is cyclical.




* WPI eases but inflation a concern

Inflation accelerated significantly during February-April 2022 due to higher prices of fuel and food, which constitute about half of the inflation basket, and elevated core inflation. It peaked at 7.8% in April.

Wholesale price index (WPI) has been in averaged 14.2% in the first half of FY23. However, moderating commodity prices and favourable base effects has brought down WPI inflation since June.




* Fiscal deficit target on track

The central government is on track to meet its fiscal deficit target of 6.4 %of the GDP for 2022-23 on the back of strong growth in revenue collections, the World Bank said in its report.


世界银行在其报告中表示,在税收收入强劲增长的背景下,中央政府有望实现2022-23年财政赤字占GDP 6.4%的目标。

* International reserves

At over $500 billion, India has one of the largest holdings of international reserves in the world. While the reserves have declined by about 13% this year, they still provide close to eight months of import cover, based on total imports over the last four quarters (from Q3 FY21-22 to Q2 FY22-23).



* What others forecast

In October, the International Monetary Fund (IMF) had slashed India's economic growth forecast to 6.8% for 2022 from 7.4% in its July estimate.

Fitch Ratings says India could be one of the fastest-growing emerging markets this year and pegs growth at 7%.

Last month, global ratings agency Moody's Investors Service lowered India's GDP growth forecast to 7% from 7.7% for this year.

In a recently released report, Goldman Sachs projected India to expand by 5.9% in calender year 2023 from 6.9% earlier.

Meanwhile, in its September monetary policy meet, RBI had lowered its GDP forecast for FY23 to 7% from the earlier 7.2%, citing impact of geopolitical tensions, tightening global financial conditions and slowing external demand.









Raghavan Pattathil•63• Raghavan Pattathil•Mumbai•16 hours ago

The Facts cannot be hidden for a long time. What is happening in India is a silent Revolution, without publicity ! The Government is not at all bothered about the Criticism of so called OPPOSITION. The Fragmented Opposition is a shame for Democracy !

事实真相瞒不久的。印度正在发生一场无声的革命,没有公之于众!政府一点也不介意所谓反对派的批评。四分五裂的反对党是印度皿 煮的耻辱!

 Vijay Desikan•26537• Raghavan Pattathil•USA•10 hours ago

Silent revolution? The papers are full of Modi's achievement day in and out, and blasting full force on the economy. If the revolution was any more silent everyone in India will go deaf!




Bablu Bachar•11183• Bablu Bachar•Mumbai•17 hours ago

Oppositions will not be able to digest it.




Vastava•6970• Bablu Bachar•UP•15 hours ago

paid news for bhakts




p u sastry•788• Tony Stark•16 hours ago

Large percentage of this credit goes to South Indian states where growth is much higher.




Shishir Dash•28590• Shishir Dash•16 hours ago

If Congress would have been at the helm, India’s growth would have achieved a bigger height. Note : Growth here means growth in corruption.

如果国大党掌权,印度的增长会更上一层楼。注:我说的增长指的是腐 败的增长。



Yoji Yogi• Shishir Dash•16 hours ago

Such a pity that after 8 years of Acche din bhakts still say "if Congress....this that".




Vastava•6970• Shishir Dash•UP•15 hours ago

Congress is much better than illiterate bjp, during congress rupee was strong, economy was good with better jobs for everyone




Harry• Vastava•USA•13 hours ago

LOL. growth rate was 4% during most of Congress time, contemptly called " Hindu growth rate". But ther was nothing Hindu about it. It should be called " seculatist growth rate"




International English•8560• User English•17 hours ago

Lesson learned from other countries: Comedians should be kept as Oppositions, and never be given a chance to lead a country.




Bonny Moraes•10799• User English•Goa•14 hours ago

The only permanent thing is the land and may be, the people to some extent. Leaders come and go.




Sukwinder•6659• User English•16 hours ago

Yes lesson learned from other countries, such as the US, old men should not be kept as leaders.




User Kumar• User Kumar•16 hours ago

Its a shame Delhi Beggers stil vote for revdi chaap corrupt anarchist Kejriwal..........

真可惜,德里乞丐到现在还会投票给腐 败的无政府主义者柯内瓦尔..........



Vastava•6970• User Kumar•UP•15 hours ago

Delhi has educated people, not like UP




Bonny Moraes•10799• User Kumar•Goa•14 hours ago

It is possible the the voters too are corrupt. Agree?

有可能选民也贪污腐 败了。是吗?



India First•17 hours ago

Liptards and chamche - world bank is lying.




Vastava•6970• India First•UP•15 hours ago

Paid news




Lord Nord•12320• India First•17 hours ago

it's fake news btw




Sukwinder•6659• India First•16 hours ago

Of course they will lie. I have worked with them. I know what they can do with words and numbers.




User kumar nayak•12742• User kumar nayak•16 hours ago

Definitely going to hurt the Pappu and Khujli followers.




Bonny Moraes•10799• User kumar nayak•Goa•14 hours ago

World banks says so many thing, some sound favourable while others don’t. When things are said in our favour then the world bank is good if goes agains us they are anti India.




Vastava•6970• User kumar nayak•UP•15 hours ago

They didnt sell everything to ambani or adani




Haridas Nair•3493• Haridas Nair•15 hours ago

Tite slap to all those people who were blaming modi government




Ragu mudur•24682• Haridas Nair•Bengaluru•14 hours ago

sir please advice Kerala people to stop supporting CPI




Subir Kumar Roy•595•16 hours ago

now the comedian will run across the Globe (Undisclosed Locations) to prove the World Bank wrong.




Vkr•23790• Subir Kumar Roy•15 hours ago

not comedian better day no.1 liar.




Prashanth C A•10720• Prashanth C A•15 hours ago

Burned moment for all MODI-haters.....




Nemam Natarajan Pasupathy•31574•Hyderabad•16 hours ago

We all are aware of it. No certification is needed from World Bank ! Pappu will still not believe and beat around the bush on inflation and job opportunity!

The other opposition leaders are no better.





Mark• Mark•13 hours ago

It is OK to grow. But why is this government promoting Hindutva Extrimist. I want to be part of the growth but not at cost of basic freedom. Hopefully if they really care about India they will move away from Extremism




Vishal Sheth•15121•Mumbai, India•15 hours ago

Usual trend. Both RBI and World Bank make high estimates and then revise them downwards. This has been happening for years now.


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