UN report revises India’s 2024 GDP growth forecast downward to 6.2%

The report said GDP in the larger South Asian region grew by an estimated 5.3 per cent in 2023 and is projected to increase by 5.2 per cent in 2024, driven by a robust expansion in India, “which remains the fastest-growing large economy in the world”.

3 min readNew DelhiUpdated: Jan 6, 2024 07:33 AM IST

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“Growth in India is projected to reach 6.2 per cent in 2024, slightly lower than the 6.3 per cent estimate for 2023, amid robust domestic demand and strong growth in the manufacturing and services sectors,” said the World Economic Situation and Prospects (WESP) report.

A United Nations report Friday revised India’s gross domestic product (GDP) growth forecast for the 2024 calendar year to 6.2 per cent from its earlier estimate of 6.7 per cent.

The report said GDP in the larger South Asian region grew by an estimated 5.3 per cent in 2023 and is projected to increase by 5.2 per cent in 2024, driven by a robust expansion in India, “which remains the fastest-growing large economy in the world”.

The UN report said investment prospects in China face headwinds from a struggling property sector though government-led infrastructure investments are partially offsetting the shortfall in private investments. The assessment comes at a time India is positioning itself as an alternate investment destination to China.

“In 2022, FDI (foreign direct investment) flows to India rose by 10 per cent, making it the third largest host country for announced greenfield projects. Another driver of fixed capital formation in the country is the increased government spending on roads, railways, and renewable energy projects, which can have a crowd-in effect on private sector investment,” the report said.

The report said global merchandise trade and global industrial production remain exceptionally weak amid cyclical and structural headwinds and during the third quarter of 2023, the manufacturing Purchasing Managers’ Index was in contraction territory in all of the world’s largest economies except India.

The report said slowing global demand, unresolved trade tensions between the largest trading partners and geopolitical conflicts are affecting trade flows in the short term. The war in Ukraine and the sanctions imposed on Russia have also shaped global trade patterns.

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“Crude oil exports from the Russian Federation, for example, have shifted from the European Union to China and India, which together accounted for close to 75 per cent of the country’s crude oil exports in the first quarter of 2023,” it said.

“Warmer-than-average temperatures will likely boost power demand and may also place a strain on local hydropower resources amid lower levels of precipitation, which could lead to power rationing constraining industrial activity, as has already been experienced by some South Asian countries in recent years,” it said.

The report highlighted that climate change-related events continued to hurt the South Asian region in 2023. Droughts intensified considerably during July and August, affecting most of India, Nepal and Bangladesh, while Pakistan recorded above-average rainfall.

The 2023 GDP growth projection was revised upwards by 0.5 percentage points to 6.3 per cent.