In a recent update, a United Nations report has revised India’s Gross Domestic Product (GDP) growth forecast for the calendar year 2024, lowering it from the previous estimate of 6.7% to 6.2%. The World Economic Situation and Prospects (WESP) report highlighted that this adjustment is attributed to robust domestic demand and significant growth in the manufacturing and services sectors.
India, recognized as the world’s fastest-growing large economy, is expected to sustain a growth rate slightly lower than the 6.3% estimate for 2023. The larger South Asian region experienced a GDP growth of 5.3% In 2023, with projections indicating a further increase to 5.2% in 2024, primarily driven by India’s robust expansion.
The report also sheds light on global economic trends, noting challenges faced by China’s investment prospects due to struggles in the property sector. Meanwhile, India positions itself as an alternative investment destination, with a 10% increase in Foreign Direct Investment (FDI) flows in 2022, making it the third-largest host country for announced greenfield projects.
Global merchandise trade and industrial production remain weak, with India being an exception during the third quarter of 2023, where the manufacturing Purchasing Managers’ Index showed growth. The report attributes the short-term challenges in trade flows to slowing global demand, trade tensions, and geopolitical conflicts, including the impact of the war in Ukraine.
The shift in crude oil exports from the Russian Federation to China and India is highlighted, with these countries accounting for a significant portion. Climate change-related events, including intensified droughts in parts of India, Nepal, and Bangladesh, are identified as factors affecting the South Asian region in 2023.
Despite the downward adjustment in India’s GDP growth forecast, the report underscores the nation’s positive trends, including increased government spending on infrastructure projects. However, it also points out the potential challenges posed by warmer-than-average temperatures affecting power demand and hydropower resources.
As India continues to navigate economic dynamics in a global context, the report provides insights into the multifaceted factors influencing its growth trajectory and underscores the need for resilience in the face of evolving challenges.