India’s growth is expected to slow to 6.9 per cent in Financial Year 2023, a 0.6 percentage point decrease since June, as the global economy and rising uncertainty weigh on export and investment growth, according to the World Bank.

However, India is expected to be the fastest growing economy among the seven largest developing economies.

The World Bank predicted that global growth in 2023 would slow to 1.7 per cent from the 3 per cent expected six months ago, citing elevated inflation, higher interest rates, reduced investment and disruptions caused by Russia’s invasion of Ukraine.

“Growth in India is expected to slow from 8.7 per cent in FY 2021-22 to 6.9 per cent in FY2022-23, with the latter revised 0.6 percentage points lower since June. The global economic slowdown and rising uncertainty will weigh on export and investment growth,” according to the World Bank’s latest Global Economic Prospects report.

According to the bank, government infrastructure spending and various business facilitation measures will crowd in private investment and support the expansion of manufacturing capacity.

“Growth is expected to slow to 6.6 per cent in FY2023-24 before returning to its potential rate of just above 6 per cent. India is predicted to have the fastest growing economy among the seven largest developing economies (EMDEs),” the report added.

Given the global economy’s precarious state, any new negative development—such as higher-than-expected inflation, sharp rises in interest rates to contain it, a resurgence of the Covid-19 pandemic, or escalating geopolitical tensions—could send it into recession.

“This would be the first time in more than 80 years that two global recessions occurred within the same decade,” said one analyst as the World Bank made the observation. According to the IMF, global growth will slow from 6 per cent in 2021 to 3.2 per cent in 2022 and 2.7 per cent in 2023. The IMF will issue its next update later this month.

Global growth has slowed due to the lag effect of global central banks tightening monetary policy and weakening external demand. The RBI forecasts a 6.8 per cent growth in India’s GDP in FY23.