The World Bank cut India's economic growth forecast for the present fiscal year by 120 bps to 7.5 percent, as rising inflation, supply chain disruptions and geopolitical tensions may offset buoyancy in recovery.

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"In India, growth is forecast to edge down to 7.5 percent in the fiscal year 2022-23, with headwinds from rising inflation, supply chain disruptions, and geopolitical tensions offsetting buoyancy in the recovery of services consumption from the pandemic," the World Bank said in its latest issue of the Global Economic Prospects.

Growth, it said, will also be supported by fixed investment undertaken by the private sector and by the government, which has introduced incentives and reforms to improve the business climate. This forecast reflects a 1.2 percentage point downward revision of growth from the January projection, the bank added.

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For the next fiscal year, it raised India's economic growth forecast by 30 bps, but lowered it to 7.1 percent and the same for the 2024-25 fiscal year is estimated at 6.5 percent.

Not just India, World Bank has sharply downgraded its outlook for the global economy, pointing to a toxic mix of high inflation and sluggish growth unseen for more than four decades.

It predicts the world economy to expand 2.9 percent this year, down from 5.7 percent global growth in 2021 and the 4.1 percent it had forecast for 2022 back in January. The agency also predicts a mere 3 percent global growth in both 2023 and 2024.

"For many countries, a recession will be hard to avoid," said David Malpass, the World Bank's president.

For the United States, the World Bank slashed its growth forecast to 2.5 percent this year from 5.7 percent in 2021 and from the 3.7 percent it had forecast in January. For the 19 European countries that share the euro currency, it downgraded the growth outlook to 2.5 percent this year from 5.4 percent last year and from the 4.2 percent it had expected in January.

In China, the world's second-biggest economy after the United States, the World Bank expects growth to slow to 4.3 percent from 8.1 percent last year.

Emerging market and developing economies are collectively forecast to grow 3.4 percent this year, decelerating from a 6.6 percent pace in 2021.

The World Bank has warned the danger of stagflation is considerable today.

With inputs from PTI

First Published:Jun 7, 2022 10:59 PM IST