The Indian economy is outperforming its counterparts and is expected to expand by 6.2% by 2024: UN

The Indian economy is outperforming its counterparts and is expected to expand by 6.2% by 2024: UN

The Indian economy is outperforming its counterparts and is expected to expand by 6.2% by 2024: UN

According to the United Nations World Economic Situation and Prospects (WESP) 2024 report, which was released here on Thursday, South Asia's GDP is expected to increase by 5.2% in 2024, mostly due to India's robust growth, which will continue to be the quickest. the world's fastest-growing economy.

India's growth rate is anticipated by the UN to reach 6.2 percent in 2024 as a result of robust domestic demand as well as rapid expansion in the manufacturing and services sectors.

According to the United Nations World Economic Situation and Prospects (WESP) 2024 report, which was released here on Thursday, South Asia's GDP is expected to increase by 5.2% in 2024, mostly due to India's robust growth, which will continue to be the quickest. the world's fastest-growing economy.

"Amid strong domestic demand as well as robust growth in both the services and manufacturing industries, growth in India is projected to reach 6.2 percent in 2024, somewhat less than the 6.3 percent forecast for 2023," stated the research.

In 2025, it is anticipated that India's GDP would increase by 6.6%. The research anticipated that India's economy will expand at a "strong" rate of 6.2 percent this year, mostly due to robust public investment and steady private consumption.

It predicted that although the industrial and service sectors would keep the economy afloat, erratic rainfall patterns will probably reduce agricultural productivity.

Head of the worldwide Economic Analysis and Policy Division (UN DESA), a worldwide monitoring arm, Hamid Rashid, told reporters that the Indian economy has beaten its peers not only this year but also in the previous several years.

India's economic growth, he added, "we believe this will continue in 2024 and 2025 as well." It has continuously been over six percent. Despite the fact that India's inflation was comparatively high, Rashid said that the country did not need to increase interest rates and that inflation had really decreased.

"This has helped the government provide the necessary fiscal support," he said. He further stated, "We have not seen significant fiscal adjustment or fiscal shrinkage in India."

"In general, household expenditure has increased, domestic consumption has increased, and the job situation has greatly improved. Thus, we have high hopes for India's economic prospects in the foreseeable future," he said.

Shantanu Mukherjee, director of the Economic Analysis as well as Policy Division, cited India's GDP growth rate through the four years from 2022-2025 in response to a question about the factors impeding the country's economic growth. "I am not sure that 7.7%, 6.3%, 6.2%, as well as 6.6% are really holding something back," Mukherjee said.

"In a sort of abstract sense, should you grow too fast for India's scale and level of complexity, there is an opportunity of the economy overheating," he said.

The Indian government, according to Mukherjee, has just updated its tax collecting methods, and "they have definitely helped as well as given a more stable playing field for businesses as well as various initiatives to progress." He emphasized that there are threats to the economy, some of which are more global in scope.

"In many ways, India's economy still relies heavily on agriculture. Furthermore, it is particularly vulnerable to climate change due to its tropical location. Although El Nino is a common occurrence, it has become harsher as a result of climate change. Therefore, if agricultural output were to decline, the economy may be severely disrupted." Mukherjee said that even though he did not expect such a shock, "it could be problematic if such a shock occurs."

Food and gasoline costs were largely steady, which helped the Indian consumer price index stay within the range and prevented the central bank from hiking interest rates too much. Accordingly, he said, "Any shock will result in an economic reversal."

India's medium-term inflation goal range of two to six percent is anticipated to be maintained by consumer price inflation, which is predicted to drop from 5.7 percent in 2023 to 4.5 percent in 2024.

"The risk of a pickup in inflation in the coming months cannot be ruled out, as the pace of disinflation could be adversely disrupted by a potential rise in commodity prices and the negative impact of climate events on food prices," the study said.

In 2023, South Asia's labor market position is still precarious, although advances in several nations.

According to the study, which cited the Reserve Bank of India, labor market indicators in India have improved over the course of the year, with labor force participation reaching its highest level since the start of the epidemic in August.

September had the lowest unemployment rate in a year, at 7.1 percent on average. This decline was mostly seen in rural regions, even in spite of the meager monsoon rainfall. According to the report, the young unemployment rate reached its lowest point since the epidemic in the first quarter of 2023 after a notable reduction.

Report Additionally, it said that the Reserve Bank of India is putting in place suitable risk management mechanisms and has been cautiously apprehensive about opening up the nation's financial markets.

According to the UN, the pre-pandemic growth rate of three percent is expected to be replaced by a predicted 2.4 percent growth in 2024, down from an anticipated 2.7 percent in 2023.

This most recent prediction is made in light of the unexpectedly strong global economic performance in 2023. But the GDP grew more than predicted last year, masking fundamental flaws and short-term concerns.

Mukherjee informed reporters that a number of major economies, including the US, Brazil, India, and Mexico, are the primary drivers of the 2023 performance that is better than anticipated.

A significant UN economic study paints a dismal picture of the economy in the near future. Global growth faces several obstacles, including persistently high interest rates, escalating wars, slow international commerce, and an increase in climate-related calamities.

"2024 ought to be the year we emerge from this maze of difficulties," said UN Secretary-General António Guterres. "We can propel sustainable development and climate action forward and set the global economy on a solid growth trajectory for everybody by unleashing bigger, bolder investments."" However, you are welcome to bring it. stated Guterres.