India's Growth Outlook Bright: UNDESA Report Forecasts 6.7% Growth in 2024

UNDESA Report: India's Economic Growth to Remain Strong, Projected at 5.8% in 2023

The United Nations Department of Economic and Social Affairs (UNDESA) has released its mid-year update to the World Economic Situation and Prospects report, maintaining its growth forecasts for India. The report highlights the resilience of India's economy and predicts a growth rate of 5.8% in 2023, driven by robust domestic demand.

Strong Domestic Demand to Propel India's Economic Growth

According to the UNDESA report, India's economy, being the largest in the South Asian region, is expected to expand by 5.8% in 2023 and further accelerate to 6.7% in 2024. The report emphasizes that resilient domestic demand will be a key driver of India's economic growth. However, it also acknowledges the vulnerability of the South Asian region to extreme climate conditions, such as droughts and floods, which pose potential risks to India's economic outlook.

UNDESA Retains Growth Forecasts for India, Expects 6.7% Growth in 2024

The UNDESA report maintains its optimistic growth projections for India, foreseeing a growth rate of 5.8% in 2023 and an even higher growth rate of 6.7% in 2024. This projection underlines the strength and potential of India's economy in the coming years, buoyed by robust domestic demand.

Global Economic Outlook Revised, Concerns about Debt Vulnerabilities Remain

While the UNDESA report revises upward the growth forecast for the world economy in 2023 to 2.3%, it lowers the estimate for 2024 to 2.5%. The report warns of the risks posed by rapid tightening of global financial conditions, including rising interest rates and the shift from quantitative easing to quantitative tightening in developed economies. These conditions have increased debt vulnerabilities and constrained fiscal space in many developing countries and economies in transition.

RBI's Rate-Hiking Measures Expected to Impact Inflation in India

The report acknowledges the rate-hiking spree of the Reserve Bank of India (RBI), which has raised the repo rate by 250 basis points since May 2022. It anticipates that these measures will bear fruit as headline inflation figures are projected to remain below the RBI's upper tolerance limit of 6% in 2023. The report attributes the expected deceleration of inflation to moderating global commodity prices and reduced imported inflation due to slower currency depreciation.

Fitch Ratings Highlights India's Brightened Growth Prospects

Fitch Ratings recently reiterated its lowest investment grade rating with a stable outlook for India's long-term sovereign debt. The rating agency points out that growth prospects in India have brightened, particularly as the private sector shows signs of stronger investment growth. Fitch forecasts

Robust Domestic Demand to Drive India's Economic Growth in 2023

The UNDESA report notes that robust domestic demand will be the main driver of India's economic growth in 2023. This is supported by a number of factors, including:

• A growing population: India is the second most populous country in the world, with a population of over 1.3 billion people. This large and growing population provides a large pool of potential consumers, which is driving demand for goods and services.

• Rising incomes: India's economy has been growing at a rapid pace in recent years, and incomes are rising for many Indians. This is leading to increased spending on goods and services, which is boosting demand.

• Strong government spending: The Indian government has been spending heavily on infrastructure and other projects in recent years. This is helping to stimulate economic growth and create jobs.

Higher Interest Rates and Weaker External Demand to Weigh on Investment and Exports

While robust domestic demand will be the main driver of India's economic growth in 2023, higher interest rates and weaker external demand will continue to weigh on investment and exports.

• Higher interest rates: The Reserve Bank of India has been raising interest rates in an effort to control inflation. This is making it more expensive for businesses to borrow money, which is discouraging investment.

• Weaker external demand: The global economy is facing a number of challenges, including the war in Ukraine and rising inflation. This is leading to weaker demand for Indian exports, which is hurting the economy.

Despite these challenges, the UNDESA report is optimistic about India's economic outlook. The report projects that India will be one of the fastest-growing economies in the world in 2023 and 2024.

ThinkWithNiche News' conclusion

The UNDESA report affirms India's positive economic outlook, forecasting robust growth driven by strong domestic demand. India's economy, the largest in the South Asian region, is projected to grow by 5.8% in 2023 and accelerate further to 6.7% in 2024. The report acknowledges the challenges posed by higher interest rates and weaker external demand on investments and exports. However, it highlights India's resilience and emphasizes the need to address potential risks associated with extreme climate conditions. The report also recognizes the impact of the Reserve Bank of India's rate-hiking measures on inflation, expecting it to remain below the central bank's upper tolerance limit. Overall, the report underscores India's brightened growth prospects amidst global uncertainties.

Important News Tags and Headlines for Readers

UNDESA Report: India's Economic Growth to Remain Strong, Projected at 5.8% in 2023

Robust Domestic Demand to Propel India's Economic Growth

UNDESA Retains Growth Forecasts for India, Expects 6.7% Growth in 2024

Continued Resilience Amidst External Challenges

Global Economic Outlook Revised, Concerns about Debt Vulnerabilities Remain

RBI's Rate-Hiking Measures Expected to Impact Inflation in India

Anticipated Deceleration of Inflation and its Factors

Fitch Ratings Highlights India's Brightened Growth Prospects

Strengthened Private Sector Investment Growth Outlook