India economy robust despite headwinds: World Bank

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India will stay one of the world’s fastest-growing economies thanks to strong domestic demand and investment helping it weather inflation and challenging global conditions, the World Bank said Tuesday.

Like other countries, India has been buffeted by global headwinds including tightening financial conditions and the effects of the war in Ukraine on global food and oil markets.

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Its economy nonetheless grew 7.2 percent in the last financial year, the second-highest among G20 countries.

The World Bank said in a regular report that growth would taper slightly to 6.3 percent for the current fiscal year because of “challenging external conditions and waning pent-up demand.”

Inflation spiked to 7.8 percent in July after a surge in prices for food staples, including wheat and rice, caused in part by bad weather and pest attacks in production belts.

India’s central bank warned the following month that higher food costs were expected to get worse, and the government put curbs on some rice exports to put downward pressure on prices.

“While the spike in headline inflation may temporarily constrain consumption, we project a moderation,” said Dhruv Sharma, senior economist at the World Bank and lead author of Tuesday’s report.

“Overall conditions will remain conducive for private investment,” he said.

The World Bank forecast the government’s fiscal deficit to decline from 6.4 percent to 5.9 percent of GDP in the current financial year, with debt stabilizing at 83 percent of GDP.

India overtook Britain last year to become the world’s fifth-largest economy and recently surpassed China to become the most populous country.

It recorded 7.8 percent growth for the June quarter, the most recent figures available.

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