U.N. Raises India's 2024 Growth Forecast to Nearly 7%

By IndraStra Global Editorial Team

Cover Image Attribute: Image by Shiva Reddy from Pixabay

The United Nations has increased its growth projections for India's economy in 2024, now predicting it will expand by nearly 7% this year. This growth is largely attributed to robust public investment and steady private consumption.
According to the World Economic Situation and Prospects report as of mid-2024, released on Thursday, India's economy is expected to grow by 6.9% in 2024 and 6.6% in 2025. This growth is driven by strong public investment and resilient private consumption. Despite weak external demand affecting merchandise exports, exports of pharmaceuticals and chemicals are anticipated to grow significantly.
The 6.9% growth forecast for India in the mid-year update is an upward revision from the 6.2% GDP growth predicted by the U.N. in January. The January edition of the U.N. World Economic Situation and Prospects 2024 report projected India's growth at 6.2% for 2024, fueled by strong domestic demand and significant growth in the manufacturing and services sectors. The GDP growth projection for 2025 remains at 6.6% in the latest economic assessment.
The update indicated that consumer price inflation in India is expected to decrease from 5.6% in 2023 to 4.5% in 2024, staying within the central bank’s medium-term target range of two to six percent. Likewise, inflation rates in other South Asian countries fell in 2023 and are projected to decrease further in 2024, with rates ranging from 2.2% in the Maldives to 33.6% in Iran. Despite some reduction, food prices remained high in the first quarter of 2024, particularly in Bangladesh and India.
In India, labor market indicators have improved due to strong growth and higher labor force participation. The government is committed to gradually reducing the fiscal deficit while aiming to boost capital investment.
South Asia’s economic outlook is expected to remain robust, driven by India's strong performance and slight recoveries in Pakistan and Sri Lanka. The region's GDP is projected to grow by 5.8% in 2024, an upward revision of 0.6 percentage points since January, and by 5.7% in 2025, which is below the 6.2% growth recorded in 2023. However, tight financial conditions and fiscal and external imbalances will continue challenging South Asia's growth. Additionally, potential increases in energy prices due to geopolitical tensions and ongoing disruptions in the Red Sea pose risks to the regional economic outlook.
The global economy is now projected to grow by 2.7% in 2024, an increase of 0.3 percentage points from the January forecast, and by 2.8% in 2025, a 0.1 percentage point rise.
These upward revisions are primarily due to an improved outlook in the United States, with the latest forecast predicting 2.3% growth in 2024, up by 0.9 percentage points since January, and better prospects in several large emerging economies, particularly Brazil, India, and Russia.
The report highlighted that several large developing economies, such as Indonesia, India, and Mexico, benefit from strong domestic and external demand. In contrast, many economies in Africa, Latin America, and the Caribbean are on a low-growth path, struggling with high inflation, elevated borrowing costs, persistent exchange rate pressures, and ongoing political instability. According to the mid-year update, the potential escalation and spread of conflicts in Gaza and the Red Sea add further uncertainties to the near-term outlook for the Middle East.
Global trade is anticipated to rebound in 2024. The initial increase in trade flows in the early months of the year is largely due to the clearing of inventory accumulated during the supply-chain disruptions of 2021-22. “China’s foreign trade grew faster than expected in the first two months of 2024, driven mainly by exports to emerging markets, particularly Brazil, India, and Russia,” the report noted.
Nevertheless, it added that ongoing geopolitical tensions in the Middle East, disruptions in the Red Sea, and rising freight costs continue to challenge global trade.
The mid-year update highlighted that global economic prospects have improved since January, with major economies avoiding severe downturns and reducing inflation without raising unemployment. However, the outlook remains cautiously optimistic. Persistent high interest rates, debt sustainability issues, ongoing geopolitical tensions, and worsening climate risks continue to threaten growth, jeopardizing decades of development progress, especially for the least developed countries and small island developing states.
China’s growth outlook has slightly improved. It is now expected to be 4.8% in 2024, up from the 4.7% projected in January. However, growth is projected to moderate to 4.8% in 2024, down from 5.2% in 2023. The boost from pent-up consumer demand, released after lifting pandemic-related restrictions, has largely dissipated. While increased policy support is expected to enhance investments in public infrastructure and strategic sectors, the report said the property sector poses a significant downside risk to China’s economy.
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