On Tuesday, the World Bank revised its global growth projection for 2023 upwards, attributing it to the resilience of the US and other significant economies surpassing previous expectations. However, the institution also cautioned that higher interest rates would result in a greater-than-anticipated slowdown in the following year. Additionally, the World Bank reduced India's GDP growth forecast for FY24 from 6.6% (as forecasted in January) to 6.3%.

According to the World Bank's most recent Global Economic Prospects report, global GDP is projected to increase by 2.1% this year. This represents an improvement from the previous forecast of 1.7% issued in January. However, it falls significantly short of the 3.1% growth rate recorded in 2022.

The global growth forecast for 2024 by the development lender has been reduced from 2.7% in January to 2.4%. This adjustment is attributed to the ongoing impact of stricter monetary policies, which have notably decreased both business and residential investment.

"Growth over the rest of 2023 is set to slow substantially as it is weighed down by the lagged and ongoing effects of monetary tightening, and more restrictive credit conditions. These factors are envisaged to continue to affect activity heading into next year, leaving global growth below previous projections."," it said.

The bank's projection for global growth to recover to 3.0% in 2025 remains unchanged. Back in January, the World Bank cautioned about the global GDP slowing down, nearly reaching a recession. 

However, since then, the US has seen stronger-than-expected performance in the labor market and consumer spending, along with China's recovery from COVID-19 lockdowns. The forecast for US growth in 2023 has been revised to 1.1%, which is more than double the initial forecast of 0.5% made in January. 

Similarly, China's growth is expected to reach 5.6%, compared to the previous estimate of 4.3% in January, considering the reduced growth rate of 3% in 2022 due to the impact of COVID-19. Nevertheless, the bank has reduced its earlier forecast for US growth in 2024 to 0.8%, which is half of the previous estimate. 

Additionally, China's growth forecast has been decreased by 0.4 percentage points to 4.6%. As for the euro zone, the forecast for 2023 shows an increase to 0.4% growth, compared to the previous flat outlook in January. However, there has been a slight reduction in the forecast for the following year.