India’s 2024 GDP Growth Revised Upwards by U.N. to Nearly 7%

The United Nations has revised India’s GDP growth projection for year 2024 to 6.9%, up from the 6.2% forecasted in January. This upward revision rests on India’s strong public investment and growing private consumption.

Key Drivers of India’s Economic Growth

The World Economic Situation and Prospects report, released by the United Nations (UN), in mid-2024, highlights that India’s economy is expected to expand by 6.9% in 2024 and 6.6% in 2025. The main drivers of this growth are:

1. Strong public investment
2. Resilient private consumption
3. Robust growth in pharmaceuticals and chemicals exports

Manufacturing and Services

As per the report, the manufacturing and services sectors are expected to contribute significantly to India’s economic growth.

The World Economic Situation and Prospects report (WESP) report notes that the overall global demand for goods is expected to remain weak, which could negatively impact India’s exports, despite this general trend, India’s exports in two specific sectors – pharmaceuticals and chemicals – are expected to perform well and expand strongly.

The expansion of multinational companies operations in India, will further enhance supply chain diversification and boosts growth.

What are the Inflation Projections?

As per the report update, Consumer price inflation in India is also projected to decelerate from 5.6% in 2023 to 4.5% in 2024, staying within the Reserve Bank of India’s medium-term Inflation target range of 2-6%. This moderation in inflation is also expected to support India’s economic growth.

Projections for India’s Economic Growth in 2025

The UN projects India’s GDP growth to be 6.6% in 2025, consistent with earlier forecasts. This indicates a sustained growth trajectory for the Indian economy in the upcoming years.

India’s growth projections from various Institutions

Various other economic institutions have also revised their projections for India’s GDP growth in 2024:

• Moody’s revised India’s GDP growth estimate to 6.8% from 6.1%.
• The International Monetary Fund (IMF) raised India’s growth forecast to 6.8% from 6.5%.
• The RBI estimates a growth rate of 7% for the current financial year.
• S&P Global Ratings, Morgan Stanley, Asian Development Bank (ADB), and Fitch Ratings project growth rates around 6.8% to 7%.

Global Economic Growth Projections for 2024

As per the latest WESP report of UN, The world economy is expected to grow by 2.7% in 2024, an increase from the January forecast of 2.4% from same report. South Asia’s regional GDP is projected to grow at 5.8% in 2024.

South Asia’s Economic Outlook

World Economic Situation and Prospects report (WESP) report notes that the economic future of South Asia is promising, mainly due to India’s strong economic growth and the improving economic situations in Pakistan and Sri Lanka.

The region’s total economic output (GDP) is expected to increase by 5.8% in 2024, which is 0.6 percentage points higher than what was predicted in January. In 2025, the growth is forecast to be 5.7%, which is a bit lower than the 6.2% growth seen in 2023.

Potential Risks and Challenges to India’s Economic Growth

Despite the positive growth projections, India’s economy faces following potential risks and challenges:

1. Geopolitical tensions, especially in the Middle East, which could disrupt global trade and stability.
2. Subdued external demand weighing on India’s merchandise export growth.
3. Potential increases in energy prices due to geopolitical tensions and disruptions in the Red Sea.
4. Climate change impacts, such as extreme weather events, threatening lives, agriculture, food security, and businesses, potentially costing India up to 4.5% of its GDP by 2030.