India’s GDP To Grow At 6.7% In 2024: UNDESA Report

Strong domestic demand will be the main driver of India's economic development in 2023, but higher interest rates and lower external demand will continue to have a negative impact on investment and exports throughout the year, according to the United Nations Department of Economic and Social Affairs (UNDESA).

The UNDESA maintained its growth projections for India at 5.8 per cent and 6.7 per cent for the calendar years 2023 and 2024, respectively, in its mid-year update to its World Economic Situation and Prospects report.

Resilient domestic demand is predicted to help India's economy—the biggest in the (South Asian) region—expand by 5.8 per cent in 2023 and 6.7 per cent in 2024. Potential droughts and floods also represent a considerable danger to the economic outlook because the (South Asian) region is especially prone to harsh climatic conditions, the paper warned.

The UN arm increased its 2023 global economic growth forecast to 2.3 per cent from its earlier estimate of 1.9 per cent, but it decreased its 2024 forecast to 2.5 per cent from its earlier estimate of 2.7 per cent

The report also mentions that the Reserve Bank of India's rate-hiking spree, which resulted in an overall increase of 250 basis points in the repo rate since May 2022, will finally pay off because the headline inflation figure is anticipated to stay well below the central bank's upper tolerance limit of 6 per cent in 2023.

“Inflation in India is expected to decelerate to 5.5 per cent in 2023 as global commodity prices moderate and slower currency depreciation reduces imported inflation,” the paper said.