UN Raises India's Economic Growth Forecast For 2024 To Nearly 7%

The mid-year update has raised India's economic growth projections to 6.9 per cent, marking an increase from the UN's earlier forecast of 6.2 per cent GDP growth in January this year

The United Nations has revised India's growth projections for 2024 and anticipates the country's economy expanding by nearly 7 per cent this year. This growth is primarily attributed to robust public investment and resilient private consumption. The World Economic Situation and Prospects, as of mid-2024, released on Thursday, states, “India’s economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025, mainly driven by strong public investment and resilient private consumption. Although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly.”

The mid-year update has raised India's economic growth projections to 6.9 per cent, marking an increase from the UN's earlier forecast of 6.2 per cent GDP growth in January this year. The UN World Economic Situation and Prospects (WESP) 2024 report, launched in January, had anticipated India's growth to reach 6.2 per cent in 2024, supported by robust domestic demand and notable expansion in the manufacturing and services sectors. However, the projection for India's GDP growth in 2025 remains unchanged at 6.6 per cent in the latest assessment of the economic situation.

According to the update, consumer price inflation in India is forecasted to ease from 5.6 per cent in 2023 to 4.5 per cent in 2024, aligning with the central bank’s medium-term target range of two to six per cent. Likewise, inflation rates across other South Asian nations declined in 2023 and are anticipated to further decelerate in 2024, ranging from 2.2 per cent in the Maldives to 33.6 per cent in Iran. Despite some moderation, food prices remained high in the first quarter of 2024, particularly in Bangladesh and India.

The report noted an improvement in labour market indicators in India, attributed to robust growth and increased labour force participation. The Indian government maintains its commitment to gradually reducing the fiscal deficit while aiming to boost capital investment.

The economic outlook for South Asia is expected to remain robust, supported primarily by India's strong economic performance and a modest recovery in Pakistan and Sri Lanka. Regional GDP is forecasted to grow by 5.8 per cent in 2024, reflecting an upward revision of 0.6 percentage points since January. It will increase by 5.7 per cent in 2025, slightly below the 6.2 per cent recorded in 2023. 

However, persistent tight financial conditions fiscal and external imbalances are anticipated to continue exerting pressure on the region's growth trajectory. Additionally, potential escalations in energy prices due to geopolitical tensions and ongoing disruptions in the Red Sea pose risks to the regional economic outlook.