According to the United Nations Department of Economic and Social Affairs, India continues to be the world’s fastest-growing large economy. The World Economic Situation and Prospects 2024 report predicts a 6.2% growth for India by 2024.
Highlights Of The Report
- Factors Influencing Growth: This growth will be driven by strong domestic demand and significant expansion in both manufacturing and services sectors. However, the growth rate is likely to be slightly less than the 6.3% estimated for 2023.
- GDP Projection for 2025: The UN report also projects an increase in India’s GDP to 6.6% in 2025. The robust growth is expected to be supported by private consumer spending and extensive public investment.
- Challenges to Growth: The report cautions that inconsistent rainfall patterns may negatively impact agricultural output, despite the strong support from manufacturing and services sectors. Nonetheless, the economic growth in India remains strong, expected to hold steady at 6.2% for this year.
- Inflation Concerns in South Asia: Inflation in South Asia is expected to continue decreasing and hit the Central Bank’s medium-term target range of two to six percent. However, we cannot ignore the possibility of inflation surging in the coming months. Factors such as potential hikes in commodity prices and the impact of climate change on food costs could disrupt the deflation trend.
- Labor Market Conditions in 2023: Despite some improvements, the labor market in South Asia was still delicate in 2023. India, however, saw positive changes in its labor market. According to the Reserve Bank of India, the labor force participation in the country reached its highest rate since the pandemic began, notably in August.
- Unemployment Rate: The average unemployment rate in India was 7.1% in September, the lowest in a year. Interestingly, unemployment in rural areas decreased despite unfavorable monsoon conditions. Also, youth unemployment rates saw a significant drop in the first quarter of 2023, hitting the lowest since the pandemic.
- Risk Management by Reserve Bank of India: The Reserve Bank of India showed caution while opening the country’s financial markets. The Bank has been working on implementing efficient risk management systems.
- Global Economic Growth Forecast: The UN predicts that global economic growth will slow down from 2.7% in 2023 to 2.4% in 2024. This projected rate still falls below the pre-pandemic growth rate of 3%. Even though the global economy outperformed expectations in 2023, this strong GDP growth may conceal short-term risks and structural vulnerabilities.