UN revises India’s 2024 GDP growth upwards to 6.9% from 6.2% projected in Jan

The United Nations has revised India’s growth projections for 2024, and has projected the economy to expand by close to 7 per cent this year. The agency’s World Economic Situation and Prospects (WESP) report as of mid-2024, released on Thursday, stated that India’s economy is forecast to expand by 6.9 per cent in 2024 and 6.6 per cent 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. Although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly,” the report stated. 

The UN in January had projected a growth rate of 6.2 per cent, which has now been revised upwards. The projection for 2025 at 6.6 per cent remains unchanged. 

The update projected a deceleration of consumer price inflation from 5.6 per cent in 2023 to 4.5 per cent in 2024. This is in line with the Reserve Bank of India’s (RBI’s) 2-6 per cent medium-target range. 

Labour market indicators have improved too amid a robust growth and higher labour force participation. The government is also committed to gradually reduce fiscal deficit, and increase capital investment. 

The UN projection comes after Moody’s Ratings pegged the growth of the Indian economy at 6.6 per cent in the current fiscal year, which is lower than the RBI and other agencies’, but at par with Deloitte’s, which also projected a growth of 6.6 per cent.

The RBI, on the other hand, projected a growth of 7 per cent in the current fiscal, while S&P Global Ratings and Morgan Stanley projected a growth rate of 6.8 per cent. Asian Development Bank (ADB) and Fitch Ratings each also estimated growth at 7 per cent. 

WORLD ECONOMY GROWTH

Pakistan and Sri Lanka exhibited slight recovery, and along with India’s robust performance the economic outlook of South Asia is expected to remain strong. The regional GDP was also projected upwards to grow at 5.8 per cent in 2024, a revision of 0.6 per cent since January, and 5.7 per cent in 2025. 

The world economy, meanwhile, is projected to grow by 2.7 per cent, an increase of 0.3 percentage points from the January forecast, and 2.8 per cent in 2025, an increase of 0.1 percentage points. 

The latest forecast points to 2.3 per cent growth in 2024, an upward revision of 0.9 percentage points for the US. China’s growth rate was also revised to 4.8 per cent in 2024, from 4.7 per cent projected in January. 

Several large developing countries like Indonesia, India and Mexico are benefiting from strong domestic and external demand, but many economies in Africa, Latin America and Caribbean are on a low-growth trajectory facing high inflation, elevated borrowing costs, persistent exchange rate pressures and lingering political instability. 

Global trade is expected to recover in 2024, but persistent geopolitical tensions in the Middle East, disruptions in the Red Sea, and escalating cost of freight continue to pose challenges.