Indian Economy Expands by 6.7%, Targets 6.5% Next

Indian Economy Expands by 6.7%, Targets 6.5% Next

Key Points:

  • Indian economy grew by 6.7% in 2023, driven by public investment and a strong services sector.
  • Global economic growth was 2.7% in 2023, with challenges including inflation and trade disruptions.
  • Analysts project China’s economic growth in 2024 at 4.9% amid several domestic challenges.
  • The “Financing for Development at a Crossroads” report focuses on investment shifts from China to India.

Indian economy grew by 6.7% in 2023, propelled by significant public investment and a robust services sector. The vitality of the services sector was particularly noteworthy, with local consumer services and exports of business services experiencing high demand. Looking ahead to 2024, the growth projection stands slightly lower at 6.5%. Ongoing strong public investment and sustained benefits from the services sector underpin the forecast. Additionally, the positive effects of multinational companies increasingly using India as a manufacturing base are expected to contribute to economic momentum.

Global Economy Grows 2.7% in 2023, Predicts 2.6% in 2024

The Global Economy managed a growth rate of 2.7% in 2023, narrowly staying above the recession threshold. This was despite several risks that did not fully materialise. Anticipating 2024, we expect a slight deceleration to 2.6%, compared to an average growth of 3.2% in the pre-pandemic years of 2015-2019. The main challenges on the horizon include persistent inflation, trade disruptions, and the overarching issues of climate change, under-investment, and growing inequalities.

China’s 2024 Economic Forecast: Growth at 4.9%

China’s economic forecast for 2024 shows a growth rate of 4.9%. The country faces several obstacles, including external uncertainties, a troubled housing market, and a lacklustre labour market, which has led to subdued consumption levels. These factors combined suggest a challenging year ahead for Asia’s largest Economy.

UNCTAD Report Highlights Indian Economy Resilience

A recent UNCTAD report highlighted India’s economic resilience, projecting it to continue as the fastest-growing major economy. The report anticipates stable interest rates and suggests vigorous public investment will offset restrained public consumption. Furthermore, it noted the increasing trend of multinational corporations diversifying their manufacturing bases from China to India. Moderating commodity prices are expected to bolster Indian exports and reduce the import bill.

Investments Surge in Indian Economy, Shaping South Asia’s Growth

Last week’s launch of the 2024 report on “Financing for Development at a Crossroads” focused particularly on South Asia. The report emphasised strong investment in India and increased multinational interest in setting up manufacturing as an alternative to China. This shift is crucial for the region’s economic future, offering new opportunities even as neighbouring countries like Bangladesh, Pakistan, and Sri Lanka face economic pressures due to stringent IMF programmes.

While India is poised to maintain its growth trajectory, several lingering challenges threaten global economic stability. The dynamics within Asia, particularly the strategic shifts in manufacturing and investment from China to India, significantly shape the regional economic landscape.