India’s Economic Growth Projected to Reach 6.9% in 2024, According to UN
The United Nations (UN) has revised its growth projections for India, estimating a 6.9% expansion in 2024. This upward revision from the previous forecast of 6.2% is attributed to strong public investment and resilient private consumption.
Public Investment and Consumer Spending Drive Growth
The Indian economy is expected to benefit from substantial public investments and robust private consumption. The government’s focus on infrastructure development and social welfare programs is seen as a key driver of growth. Additionally, resilient consumer spending, despite rising interest rates, will contribute to economic expansion.
Export Challenges and Inflation
While external demand remains subdued, India’s pharmaceutical and chemicals exports are expected to perform strongly. The UN report, however, acknowledges that subdued demand will weigh on merchandise export growth. Inflation is projected to decelerate from 5.6% in 2023 to 4.5% in 2024, remaining within the central bank’s target range of 2% to 6%.
Robust South Asian Outlook
The positive economic outlook for India is echoed across South Asia, with the region projected to grow by 5.8% in 2024. This growth is attributed to a recovery in Pakistan and Sri Lanka. However, the report also highlights risks to the region, including tight financial conditions, fiscal imbalances, and potential increases in energy prices amidst geopolitical tensions.
Global Economic Outlook
The global economy is forecast to grow by 2.7% in 2024, up from the previous estimate of 2.3%. This upward revision is mainly due to improved prospects in the United States and large emerging economies, including India, Brazil, and Russia. The report notes that several developing economies, such as Indonesia and Mexico, are benefiting from strong domestic and external demand, while many economies in Africa and Latin America face challenges due to high inflation and political instability.
Risks and Challenges
Despite the improved outlook, the report cautions that higher interest rates, debt sustainability concerns, geopolitical tensions, and climate risks pose challenges to growth. These factors threaten decades of development gains, particularly for least developed countries and small island developing states.
Cautious Optimism
The UN report emphasizes a cautiously optimistic outlook, with major economies avoiding a severe downturn and bringing down inflation without increasing unemployment. However, the report also highlights the need to address underlying risks and ensure sustainable growth for the long term.
