UN Ups India's 2024 Growth Projection to 6.9% from 6.2%

UN Revises India's Growth Projections and Global Economic Outlook: Key Points

Revised Growth Projections for India:

• The United Nations (UN) has revised India's growth projection for 2024, expecting the economy to grow by 6.9%, up from the earlier forecast of 6.2% in January.

• The growth projection for 2025 remains unchanged at 6.6%.

Drivers of Growth:

• The UN's World Economic Situation and Prospects (WESP) report attributes India's growth to strong public investment and resilient private consumption.

• Pharmaceuticals and chemicals exports are expected to expand robustly despite subdued external demand impacting merchandise exports.

Inflation and Labour Market:

• Consumer price inflation in India is expected to decrease from 5.6% in 2023 to 4.5% in 2024, aligning with the Reserve Bank of India's (RBI) target range of 2-6%.

• The labor market has shown improvement, supported by economic growth and higher labor force participation.

Comparative Growth Estimates:

• Moody’s ratings project India’s economic growth at 6.6% for the current fiscal year, which matches Deloitte’s projection but is lower than the RBI's 7% estimate.

• S&P Global Ratings and Morgan Stanley project a growth rate of 6.8%, while the Asian Development Bank (ADB) and Fitch Ratings estimate a 7% growth rate.

Regional Economic Developments:

• South Asia's economic outlook is positive, with slight recovery in Pakistan and Sri Lanka alongside India’s strong performance.

• The regional GDP growth is expected to be 5.8% in 2024 (up from 5.2%) and 5.7% in 2025.

Global Economic Growth:

• The global economy is projected to grow by 2.7% in 2024, an increase of 0.3 percentage points from the January forecast.

• For 2025, global growth is expected to be 2.8%, a slight increase of 0.1 percentage points.

Country-Specific Revisions:

• The US economy's growth projection for 2024 has been revised upward to 2.3%, an increase of 0.9 percentage points.

• China’s growth rate for 2024 has been revised to 4.8%, up from 4.7% in January.

Developing Countries' Performance:

• Several large developing countries, including Indonesia, India, and Mexico, are benefiting from strong domestic and external demand.

• However, economies in Africa, Latin America, and the Caribbean face low growth due to high inflation, elevated borrowing costs, exchange rate pressures, and political instability.

Global Trade Outlook:

• Global trade is expected to recover in 2024, but challenges persist due to geopolitical tensions in the Middle East, disruptions in the Red Sea, and escalating freight costs.

Conclusion:

• The UN's revised projections reflect a positive outlook for India's economy, driven by strong investment and consumption.

• The global economy is also expected to see moderate growth despite various regional and geopolitical challenges.