The United Nations has revised India’s economic growth projection for 2024 upwards, forecasting a 6.9% expansion driven by strong public investment and resilient private consumption. This is an increase from the 6.2% forecast made in January this year, according to the mid-2024 update of the World Economic Situation and Prospects report released on Thursday.
The report also predicts that India’s economy will grow by 6.6% in 2025, maintaining the same projection as earlier. The upward revision is attributed to robust domestic demand and strong growth in the manufacturing and services sectors, despite subdued external demand affecting merchandise exports.
Consumer price inflation in India is expected to decelerate from 5.6% in 2023 to 4.5% in 2024, within the central bank’s target range of 2-6%. Labour market indicators in India have shown improvement, with higher labour force participation and robust growth. The government is committed to gradually reducing the fiscal deficit while increasing capital investment.
The economic outlook for South Asia remains strong, bolstered by India’s performance and a slight recovery in Pakistan and Sri Lanka. The region’s GDP is projected to grow by 5.8% in 2024 and 5.7% in 2025. However, financial conditions, fiscal and external imbalances, and potential energy price increases due to geopolitical tensions pose risks to the region’s growth.
Globally, the world economy is forecast to grow by 2.7% in 2024 and 2.8% in 2025, reflecting a better outlook for the United States and several large emerging economies, including Brazil, India, and Russia. Global trade is expected to recover in 2024, driven by destocking of inventory and stronger-than-expected trade growth in China.
Despite the improved global economic prospects, challenges such as higher interest rates, debt sustainability, geopolitical tensions, and climate risks continue to threaten growth and development gains, particularly for least developed countries and small island developing states.
