India’s economy is set to expand by 6.5% in 2024, maintaining its position as the world’s fastest-growing major economy. The UNCTAD report released on Tuesday highlights India’s growth trajectory, noting that the country’s GDP grew by 6.7% in 2023. The report underscores the positive impact of multinationals expanding their manufacturing operations in India to diversify their supply chains, which is expected to boost Indian exports.
The report attributes India’s growth in 2023 to strong public investment and a robust services sector driven by local and external demand. It anticipates these factors will continue to support India’s growth in 2024. Additionally, the report mentions the trend of multinationals shifting manufacturing processes to India, citing it as a factor that will further enhance Indian exports. The report also notes that moderating commodity prices will benefit India’s import bill.
In the context of global economic trends, the report highlights that investment in South Asia, particularly in India, remains strong. It acknowledges India’s attractiveness as an alternative manufacturing base for multinationals, especially in the context of supply chain diversification strategies.
The report suggests that the Reserve Bank of India (RBI) is likely to maintain interest rates in the near term, and strong public investment will counterbalance restrained public consumption spending. While India’s growth outlook remains positive, other Southern Asian countries such as Bangladesh, Pakistan, and Sri Lanka are facing more subdued economic growth due to IMF programmes that require tight monetary policies and fiscal austerity measures.
Globally, economic growth is projected to be 2.6% in 2024, slightly slower than in 2023. The report highlights that despite some economies facing financial challenges in 2023, global economic growth remained stable. However, it warns that policy discussions primarily focusing on inflation may overlook critical issues such as trade disruptions, climate change, low growth, under-investment, and inequalities.
The report also mentions China’s economic challenges, projecting a growth rate of 4.9% in 2024. It cites external uncertainties, a challenging housing market, an underperforming labor market, and subdued consumption as factors affecting China’s economy.
In contrast, the International Monetary Fund’s World Economic Outlook forecasts strong growth for India, projecting a GDP growth of 6.8% in 2024 and 6.5% in 2025. This forecast reflects the strength of India’s domestic demand and a growing working-age population.
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