India, world's fastest-growing economy, to grow at 6.2%: UN
India's economy is on track for a 6.2% growth in 2024, as per the United Nations World Economic Situation and Prospects (WESP) 2024 report. This will be fueled by strong domestic demand and impressive expansion in the manufacturing and services sectors. The report also states that South Asia's GDP is set to rise by 5.2% in 2024, with India maintaining its position as the fastest-growing large economy worldwide.
Resilient private consumption and public investment
The WESP report predicts India's GDP growth to hit 6.6% in 2025, with a steady 6.2% growth this year, mainly backed by solid private consumption and robust public investment. However, unpredictable rainfall patterns could negatively impact agricultural production. Hamid Rashid, Chief of the Global Economic Division Monitoring Branch (UN DESA), stated that India's economic growth has consistently stayed above 6% and is expected to continue in 2024 and 2025.
Inflation remains within bounds, allowing for fiscal support
Despite relatively high inflation, India managed to avoid significant rate hikes, and inflation has substantially decreased. Rashid observed that this enabled the Indian government to maintain the fiscal support it required without major fiscal adjustments or retrenchment. He further mentioned that domestic consumption is growing, household spending has risen, and the employment situation has significantly improved.
India's labor market indicators show improvement
The labor market in South Asia remained unstable in 2023, although some countries experienced improvements. In India, labor force participation reached its highest level since the pandemic began, as reported by the Reserve Bank of India (RBI). The unemployment rate averaged 7.1% in September, with youth unemployment rates dropping considerably during the first quarter of 2023 to the lowest point since the pandemic.
Global economic growth is projected to slow down in 2024
The UN report indicates that global economic growth is expected to decelerate from an estimated 2.7% in 2023 to 2.4% in 2024, falling below the pre-pandemic growth rate of 3%. The better-than-anticipated performance for 2023 is driven by several large economies, including the US, Brazil, India, and Mexico. However, persistently high interest rates, escalating global conflicts, slow international trade, and increasing climate disasters present significant challenges to global growth.
