Financial News: World Bank Raises China's Growth Projections, Lowers India

World Bank Raises China's Growth Projections, Lowers India's Outlook

(RTTNews) - The World Bank on Tuesday upgraded China's growth outlook for both 2025 and 2026 despite higher trade tariffs, and the lender raised India's projection for the current year on stronger-than-expected public investment but trimmed its forecast for the next fiscal year on higher tariffs.

In its latest economic update for the East Asia and Pacific group of countries, the Washington-based World Bank said the region, led by China, continued to outperform most other parts of the world.

However, the lender cautioned that the region requires ambitious reforms to create more jobs and sustain long-term growth.

China's GDP growth forecast for this year and next were raised to 4.8 percent and 4.2 percent, respectively. The new forecast for the current year was close to the official target of around 5 percent. In April, the World Bank had projected China's growth at 4.0 percent for both this year and next.

The country's growth this year was underpinned by exports in the early part of the year and continued strength in manufacturing output. But due to an expected slowdown in export growth and a likely fall in the fiscal stimulus amid rising public debt, GDP growth will ease next year, the lender noted.

The East Asia and Pacific region is projected to grow 4.8 percent this year, which is slower than the 5.0 percent expansion last year. The pace of growth is forecast to slow sharply to 4.3 percent next year due high trade barriers, weaker global economy and domestic policies.

Vietnam is forecast to log the strongest growth in the region this year, 6.6 percent, followed by Mongolia with 5.9 percent and the Philippines with 5.3 percent. Cambodia, and Indonesia are each forecast to grow at 4.8 percent, while Pacific Island countries are projected at 2.7 percent, and Thailand at 2.0 percent, the report said.

In the South Asia Development Update, the lender said growth in South Asia is on track to exceed earlier expectations and reach 6.6 percent this year but slow drastically to 5.8 percent next year, which was 0.6 points lower than the April forecast.

Although the region is making progress toward addressing vulnerabilities, South Asian economies would be affected by spillovers from a persistent global economic slowdown and export market dislocations, the bank observed.

According to the biannual report, India is set to remain the world's fastest-growing major economy, underpinned by strong consumption growth, improved agricultural output and rural wage growth. The bank raised its growth outlook for India to 6.5 percent from 6.3 percent for the current financial year.

However, the forecast for the financial year 2026-27 was downgraded to 6.3 percent from 6.5 percent, partly due to higher tariffs on exports.

In the Europe and Central Asia Economic Update, the bank projected the region to grow at a slower pace of 2.4 percent this year due to a weaker pace of expansion in the Russian Federation. Last year, the region's economy grew 3.7 percent.

Excluding Russia, regional GDP is likely to remain little changed at around 3.3 percent in 2025 and 2026, the lender said.

The World Bank forecast an improvement in economic growth for the Middle East, North Africa, Afghanistan & Pakistan group. Growth for this region is expected to climb to 3.3 percent next year from 2.8 percent this year.

That said, global uncertainty, trade policy shifts, and continued conflict and displacement all pose possible risks, the lender warned.

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