NEW DELHI: According to a UN research, India's economy is projected to expand by 6.7% in calendar year 2024, buoyed by strong domestic demand. However, rising interest rates and weaker global demand are predicted to continue to hamper investment and exports this year.
The world's largest economy, India, is anticipated to grow by 5.8% in 2023 and 6.7% in 2024 (on a calendar-year basis), according to the World Economic Situation and Prospects as of Mid-2023, which was published on Tuesday. This growth will be fueled by a strong domestic demand environment. However, it stated that in 2023, exports and investment will continue to be hampered by rising interest rates and decreased external demand.
The rate of inflation in India is predicted to fall to 5.5% in 2023 as commodity prices globally stabilise and imported inflation is reduced by a slower currency depreciation. In the mid-year assessment, the projections for India's economic development were the same as those made in the World Economic Situation and Prospects 2023 report, which was released in January of this year.
India is a "bright spot" in the global economy, according to Hamid Rashid, chief of the Global Economic Monitoring Branch of the Economic Analysis and Policy Division of the UN Department of Economic and Social Affairs.
While the regional average for South Asia is 11%, India's inflation is roughly 5.5%. As a result, there will be plenty of room for fiscal growth and monetary accommodation, which would help strengthen domestic demand, according to Rashid.
The mid-year assessment stated that despite persistent inflation, rising interest rates, and increased uncertainty, the chances of a strong global economic rebound remain slim. Instead, if the COVID-19 pandemic's lasting consequences, climate change's worsening effects, and macroeconomic structural difficulties are not addressed, the world economy could experience a protracted era of low growth.
“The current global economic outlook presents an immediate challenge to delivering on the SDGs,” said UN Under-Secretary-General for Economic and Social Affairs, Li Junhua.
Due to geopolitical unrest, a slowing global economy, and stricter monetary and fiscal regulations, there is still pressure on world commerce. In 2023, the volume of international trade in goods and services is expected to increase by 2.3%, which is significantly less than the pre-pandemic average.
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