Indian economy to grow 6.7% in 2024, says UN report

New York: Indian economy, supported by resilient domestic demand, is expected to grow by 6.7% in 2024. On the other hand, higher interest rates and weaker external demand will continue to affect investments and exports.

India is also set to be the fastest-growing major economy in the world. Chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs, Hamid Rashid called India "a bright spot" in the world economy.

Speaking to PTI, Rashid said: "Our projection for India hasn't changed since January and we see many positives, including that inflation has come down significantly. We are pretty confident with our forecast right now for the year." Inflation in India is expected to decelerate to 5.5% this year while global commodity prices moderate and slower currency depreciation reduces imported inflation.

The expert added that the risks lie on the external side. "If the external financing condition deteriorates further and it becomes much tighter, then India would face some challenges and exports may face some challenges going forward."

According to a report by the UN, India's economy is the largest in the South Asian region and it is likely to grow by 5.8% in 2023 and 6.7% in 2024 calendar years. The estimates made in the middle of 2023 remain the same as the projection made in January in the World Economic Situation and Prospects 2023 report.

The flagship report said that the prospects for other South Asian nations are "more challenging".

The regional average of inflation for South Asia is 11% and for India, it is about 5.5%. This creates more "significant room for both fiscal expansion and monetary accommodation and that would support domestic demand."

The report also said that the world economy is seeing a risk of a prolonged period of low growth because the effects of the pandemic are still around. The impact of climate change and macroeconomic structural challenges are also remaining.

The UN report said that the world economy is now projected to grow by 2.3% in 2023 and 2.5% in 2024. This is only a slight uptick in the global growth forecast. UN Under-Secretary-General for Economic and Social Affairs, Li Junhua, said the current global economic outlook presents an immediate challenge to delivering on the SDGs.

He said the global community must urgently address the growing shortage of funding faced by many developing countries and strengthen their capacities to make critical investments in sustainable development.

China is also showing improvement with a forecast of 5.3% as opposed to the projected 4.8%.