Global economic growth will dip sharply from 5.5% in 2021 to 4.1% in 2022 and 3.2% in 2023, even as India’s annual growth is projected to be 8.3% in the current fiscal year, 8.7% in 2022-23, and 6.8% in 2023-24, according to the World Bank’s Global Economic Prospects Report, released on Tuesday. The report also flagged the risks posed by growing inequality and rising inflation.

After having recovered in 2021, the global economy is headed towards a pronounced slow-down, due to the new variants of Covid-19; a rise in inflation, debt and income inequality; the winding down of fiscal and monetary support; and the fading of pent-up demand-all of which have eroded recovery prospects in emerging and developing economies in particular.

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“The rapid spread of the Omicron variant indicates that the pandemic will likely continue to disrupt economic activity in the near term. In addition, a notable deceleration in major economies including the United States and China will weigh on external demand in emerging and developing economies. At a time when governments in many developing economies lack the policy space to support activity if needed, new Covid-19 outbreaks, persistent supply-chain bottlenecks and inflationary pressures, and elevated financial vulnerabilities in large swaths of the world could increase the risk of a hard landing,” said the report.

In its outlook for South Asia, however, India stands as a relatively bright spot. The Bank’s 8.3% growth projection for India in 2021 22 is unchanged from its June 2021 outlook. But the forecast for 2022-23 and 2023-24 has been upgraded to 8.7% and 6.8%, respectively, “reflecting higher investment from the private sector and in infrastructure, and dividends from ongoing reforms”.

India’s economy is expected to grow 9.2% this financial year, according to advance estimates from the country’s statistics office, ensuring that the economy exceeds its pre-pandemic level (2019-20).

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