India expected to remain world's fastest-growing major economy: World Bank

The World Bank's latest South Asia Development Update has said that India will remain the world's fastest-growing major economy. The financial institution said that the growth will be driven by strong consumption, improved farm output, and rising rural wages. The report, however, said that South Asia's growth will remain at 6.6 per cent this year, but will slow down in 2026 to 5.8 per cent.

What did the World Bank report say?

The World Bank said that India's economic outlook is strong. It said Bangladesh is set to accelerate, while Sri Lanka is recovering faster than expected.

The World Bank further said that the region continues to lead global growth. However, the risk could affect its momentum. He said factors like global economic uncertainty, trade policy shifts, socio-political tensions, and disruptions in labour markets due to emerging technologies like artificial intelligence (AI) can affect the region's growth.

"South Asia has enormous economic potential and is still the fastest-growing region in the world. But countries need to proactively address risks to growth," said Johannes Zutt, World Bank Vice President for South Asia.

He said the governments of the nations of South Asia can strengthen productivity and create jobs by maximising the benefits of artificial intelligence and easing trade barriers.

The report claimed that high tariffs protect shrinking sectors while hurting manufacturing.

The World Bank report further said that the economies need to be ready for the rapid transformation brought on by artificial intelligence.

It said that educated young workers in sectors such as information technology and business services are vulnerable to job shifts. However, South Asia's workforce has limited exposure to the new technology.

"Increasing trade openness and growing adoption of AI could be transformative for South Asia," said Franziska Ohnsorge, World Bank Chief Economist for South Asia.