United Nations Upgrades India’s Growth Projections for 2024

The United Nations has revised upwards India’s growth projections for 2024, with the country’s economy now forecast to expand by close to 7% this year. This positive outlook is mainly driven by strong public investment and resilient private consumption, according to the World Economic Situation and Prospects report released on Thursday.

The report stated that India’s economy is expected to grow by 6.9% in 2024 and 6.6% in 2025, with strong public investment and resilient private consumption being the key drivers of this growth. Despite subdued external demand affecting merchandise export growth, the report highlighted that pharmaceuticals and chemicals exports are expected to expand strongly.

This upward revision in economic growth projections for India in the mid-year update is a significant improvement from the 6.2% GDP forecast made by the U.N. in January this year. The report also mentioned that consumer price inflation in India is projected to decelerate from 5.6% in 2023 to 4.5% in 2024, staying within the central bank’s target range.

The report also highlighted that labour market indicators in India have improved amid robust growth and higher labour force participation. The government remains committed to gradually reducing the fiscal deficit while increasing capital investment.

The economic outlook for South Asia is expected to remain strong, supported by India’s robust performance and a slight recovery in Pakistan and Sri Lanka. The regional GDP is projected to grow by 5.8% in 2024 and 5.7% in 2025, with tight financial conditions and fiscal and external imbalances continuing to pose challenges.

Global trade is expected to recover in 2024, with China’s foreign trade growing faster than expected in the first two months of the year. However, persistent geopolitical tensions and disruptions in the Middle East and the Red Sea, along with escalating freight costs, continue to pose challenges to global trade.

Overall, the report noted that global economic prospects have improved since January, with major economies avoiding a severe downturn. However, challenges such as higher interest rates, debt sustainability issues, geopolitical tensions, and climate risks continue to threaten growth.

The outlook for China also saw a slight uptick, with growth now expected to be 4.8% in 2024. While enhanced policy support is expected to boost investments, the property sector poses a significant downside risk to the Chinese economy.

In conclusion, the revised growth projections for India and positive economic outlook for South Asia signal a promising future for the region, despite ongoing global challenges.