India' Economy Expected To Grow 6.7 Per Cent In 2024, Says UN Report

The UN report pointed out higher interest rates and weaker external demand, however, will continue to weigh on investment and exports this year for India

India's inflation is expected to decelerate to 5.5 per cent in 2023 as global commodity prices moderate and slower currency depreciation reduces imported inflation.

India’s economy is expected to grow by 6.7 per cent in 2024 calendar year, supported by resilient domestic demand, a UN report said. Higher interest rates and weaker external demand, however, will continue to weigh on investment and exports this year for India, the report said.

The report named 'World Economic Situation and Prospects' as of mid-2023 released on Tuesday said India’s economy, the largest in the South Asian region, is expected to expand by 5.8 per cent in 2023 and 6.7 per cent in 2024 (calendar year basis), supported by resilient domestic demand.

According to the report, India's inflation is expected to decelerate to 5.5 per cent in 2023 as global commodity prices moderate and slower currency depreciation reduces imported inflation. The Reserve Bank of India kept the policy rate unchanged at 6.5 per cent in April 2023, after a cumulative increase of 250 basis points since May 2022, it said.

The estimates for India’s economic growth in the mid-year assessment remained unchanged from the projections made in the World Economic Situation and Prospects 2023 report launched in January this year.

The flagship report issued in January had said that India’s GDP is projected to moderate to 5.8 per cent in 2023 as higher interest rates and global economic slowdown weigh on investment and exports.

India’s economic growth is expected to remain 'strong' even as prospects for other South Asian nations 'are more challenging'. India is projected to grow at 6.7 per cent in 2024, the fastest-growing major economy in the world, the flagship report had said.

Chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs, Hamid Rashid had said at a press conference that India is a 'bright spot' in the world economy. He said, "India remains a bright spot. Our projection for India hasn't changed since January and we see many positives, including the inflation has come down significantly. We are pretty confident with our forecast right now for the year."

India’s inflation is about 5.5 per cent while the regional average for South Asia is 11 per cent. Rashid said this means there will be significant room for both fiscal expansion and monetary accommodation and that would support domestic demand.

He, however, added that risks lie on the external side. He noted that if the external financing condition deteriorates further and it becomes much tighter, then India would face some challenges and exports may face some challenges going forward.

The mid-year assessment said that prospects for a robust global economic recovery remain dim amid stubborn inflation, rising interest rates and heightened uncertainties.

According to the report, the world economy is now projected to grow by 2.3 per cent in 2023 (+0.4 percentage points from the January forecast) and 2.5 per cent in 2024 (-0.2 percentage points), a slight uptick in the global growth forecast for 2023.

In the US, resilient household spending has prompted an upward revision of the growth forecast to 1.1 per cent in 2023. The European Union’s economy, driven by lower gas prices and robust consumer spending, is now projected to grow by 0.9 per cent, the report said. China’s growth this year is now forecast at 5.3 per cent, as compared to the 4.8 per cent projected earlier this year, as a result of Covid-19-related restrictions being lifted.

"The current global economic outlook presents an immediate challenge to delivering on the SDGs," said UN Under-Secretary-General for Economic and Social Affairs, Li Junhua. "The global community must urgently address the growing shortages of funding faced by many developing countries, strengthening their capacities to make critical investments in sustainable development and helping them transform their economies to achieve inclusive and sustained long-term growth."