India's 2024 GDP Growth Projection Revised Upwards To Nearly 7 Per Cent By UN – Here's What's Fuelling The Surge

The United Nations has revised its growth projections for India's economy in 2024, now forecasting an expansion close to seven percent.

According to the UN's "World Economic Situation and Prospects" report released Thursday (16 May), India's economy is expected to grow by 6.9 percent in 2024 and 6.6 percent in 2025.

"India's economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent in 2025, mainly driven by strong public investment and resilient private consumption," the report said.

Despite subdued external demand affecting merchandise export growth, exports of pharmaceuticals and chemicals are projected to expand strongly, according to the report.

The new 6.9 percent growth forecast marks an upward revision from the 6.2 percent GDP growth projected by the UN in January.

The initial 2024 projection in the January report  had said that growth in India was projected to reach 6.2 per cent in 2024, amid robust domestic demand and strong growth in the manufacturing and services sectors. 

The 2025 GDP growth projection remains unchanged at 6.6 percent.

Consumer price inflation in India is expected to decline from 5.6 percent in 2023 to 4.5 percent in 2024, staying within the central bank's medium-term target range of two to six percent.

Inflation rates in other South Asian countries are also expected to decrease in 2024, ranging from 2.2 percent in the Maldives to 33.6 percent in Iran. Despite this, food prices remained high in the first quarter of 2024, particularly in Bangladesh and India.

The report said that India's labour market indicators have shown improvement, with robust growth and higher labour force participation.

The Indian government continues to focus on gradually reducing the fiscal deficit while increasing capital investment.

The economic outlook for South Asia is projected to remain strong, bolstered by India's performance and a slight recovery in Pakistan and Sri Lanka.

The region's GDP is expected to grow by 5.8 percent in 2024, up 0.6 percentage points from January's forecast, and 5.7 percent in 2025, below the 6.2 percent growth recorded in 2023. However, tight financial conditions and fiscal and external imbalances will continue to challenge South Asia's growth.

Potential increases in energy prices due to geopolitical tensions and ongoing disruptions in the Red Sea pose risks to the regional economic outlook.

Globally, the economy is forecast to grow by 2.7 percent in 2024, up 0.3 percentage points from January's forecast, and 2.8 percent in 2025, an increase of 0.1 percentage points.

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