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UN Revises India’s Economic Growth Forecast Upward to 6.9% for 2024 Amid Strong Public Investment and Resilient Consumption

The United Nations has revised India’s growth projections for 2024, with the country’s economy now forecast to expand by close to seven per cent this year, mainly driven by strong public investment and resilient private consumption. According to the World Economic Situation and Prospects as of mid-2024, released Thursday, India’s economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025.

This upward revision from the earlier projection of 6.2 per cent GDP growth made by the UN in January this year indicates robust growth prospects for the Indian economy. The report highlights that subdued external demand will continue to weigh on merchandise export growth, but pharmaceuticals and chemicals exports are expected to expand strongly.

The update also notes that consumer price inflation in India is projected to decelerate from 5.6 per cent in 2023 to 4.5 per cent in 2024, remaining within the central bank’s target range of two to six per cent. Labor market indicators in India have improved amid robust growth and higher labor force participation. The government of India remains committed to gradually reducing the fiscal deficit while increasing capital investment.

South Asia’s economic outlook is expected to remain strong, supported by India’s robust performance, as well as slight recoveries in Pakistan and Sri Lanka. Regional GDP is projected to grow by 5.8 per cent in 2024 and 5.7 per cent in 2025. However, tight financial conditions and fiscal and external imbalances may pose challenges to growth in the region.

Globally, the world economy is now forecast to grow by 2.7 per cent in 2024 and 2.8 per cent in 2025, with upward revisions mainly attributed to a better outlook in the United States and several large emerging economies, including Brazil, India, and Russia. Global trade is expected to recover in 2024, although persistent geopolitical tensions and disruptions in the Red Sea, along with escalating freight costs, continue to pose challenges.

While global economic prospects have improved since January, challenges such as higher interest rates, debt sustainability issues, geopolitical tensions, and climate risks persist. The outlook for China registers a slight uptick, with growth now expected to be 4.8 per cent in 2024, supported by policy support measures, although risks from the property sector remain a concern.

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