UN Revises India’s Economic Growth Forecast to 7% for 2024

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The United Nations has revised its economic growth forecast for India, projecting a significant boost driven by strong public investment and resilient private consumption.

India’s economy is now expected to grow by 6.9% in 2024, an increase from the 6.2% forecast in January. This optimistic outlook underscores India’s pivotal role in enhancing South Asia’s overall economic performance.

Revised Projections

In its latest World Economic Situation and Prospects (WESP) report released Thursday evening, the UN outlined the revised growth projections for India. The report forecasts India’s economy to expand by 6.9% in 2024 and 6.6% in 2025.

This revision aligns with projections from other international rating agencies. The Reserve Bank of India (RBI) has also projected a 7% growth rate for the current fiscal year. Similarly, S&P Global Ratings and Morgan Stanley forecast a 6.8% growth rate, while the Asian Development Bank (ADB) and Fitch Ratings both estimate a 7% growth.

Strong Public Investment and Private Consumption

The upgraded growth projection is largely attributed to robust public investment and strong private consumption.

Despite subdued external demand affecting merchandise exports, significant export growth is expected in the pharmaceutical and chemical sectors. The Indian government remains committed to reducing the fiscal deficit while increasing capital investment.

Inflation and Labour Market Trends

Consumer price inflation in India is projected to decline from 5.6% in 2023 to 4.5% in 2024, staying within the central bank’s target range of 2-6%. Inflation rates in other South Asian countries are also expected to decrease, with Iran facing the highest projected rate at 33.6%.

While food prices remain elevated in Bangladesh and India, labour market indicators in India show improvement, with higher labour force participation driven by strong economic growth.

Regional Economic Outlook

The economic outlook for South Asia is positive, bolstered by India’s strong performance and recoveries in Pakistan and Sri Lanka. The region’s GDP is expected to grow by 5.8% in 2024, an increase from the 5.2% projected in January, and 5.7% in 2025.

However, tight financial conditions, fiscal and external imbalances, and potential energy price increases due to geopolitical tensions pose risks to regional growth.

Global Economic Projections

Globally, the economy is forecast to grow by 2.7% in 2024 and 2.8% in 2025, reflecting improved outlooks in the United States, Brazil, India, and Russia.

While economies like Indonesia, India, and Mexico benefit from strong domestic and external demand, many African and Latin American countries are experiencing low growth, high inflation, elevated borrowing costs, and political instability. Geopolitical uncertainties, particularly in Gaza and the Red Sea, add further risks to the global economic outlook.

These revisions and projections highlight the dynamic and interconnected nature of global and regional economies, with India playing a crucial role in driving economic growth in South Asia.