In what is being hailed as a remarkable sign of economic vigour, the Indian economy is poised for a strong growth rate of 6.5% in the forthcoming year of 2024. A report from the United Nations indicates that alongside a shift in manufacturing strategies by multinational corporations, India’s exports are set for a significant boost. These changes are likely to further India’s position as the fastest-growing major economy on the global stage.
The United Nations Conference on Trade and Development (UNCTAD) released a report on a recent Tuesday, detailing the continuous ascent of the Indian economy which grew by 6.7% in 2023. The growth is predicted to persist, albeit at a slightly moderated pace, with a 6.5% expansion rate anticipated in 2024.
Impressively, this robust performance stemmed largely from sturdy public investment in conjunction with a vibrant services sector. The sector thrived due to strong domestic demand for consumer services coupled with firm external demands for India’s business services exports. These trends are anticipated to keep fuelling the economic growth of the nation through 2024.
Another critical element in India’s growth journey is the evolving approach of multinational companies to supply chain management. As multinationals increasingly expand their manufacturing activities into India to diversify beyond traditional bases like China, the positive repercussions on Indian exports are becoming more evident. This shift in supply chain strategies is expected to continue bolstering India’s economy by potentially alleviating the trade deficit due to moderating commodity prices.
The robustness of India’s economic prospects was underscored in another significant document, the ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads,’ released at the world body the prior week. This report emphasized the strong investment climate in South Asia, particularly in India, where multinationals are showing growing interest. India is perceived as an appealing alternative manufacturing hub, a nod to economic strategies aimed at circumventing over-reliance on Chinese supply chains.
India’s central bank, the Reserve Bank of India, is foreseen to maintain a steady interest rate in the near future. The nation is expected to curb public consumption expenses while reinforcing its economy through substantial public investment outlays. This tactful balance of fiscal prudence and strategic investment is a cornerstone of India’s economic policy in approaching years.
However, the expansion rate is less encouraging in other Southern Asian nations. Countries such as Bangladesh, Pakistan, and Sri Lanka are currently engaged in International Monetary Fund (IMF) programs that enforce stringent monetary policies and fiscal conservancy – measures that deeply impact low-income households.
Globally, economic growth is projected to be 2.6% in 2024, marking a decrease from the 2.7% growth rate seen in 2023. It also signifies the third consecutive year of global economic growth rates trailing the pre-pandemic average rate of 3.2% for the period 2015–2019, noted the UNCTAD report.
The global economy navigated potential slowdowns in 2023 more deftly than expected. Major economies, including India, managed to steer clear of significant financial distress which had loomed on the horizon earlier in the year. Consequently, the world economy expanded by 2.7%, slightly above the 2.5% threshold often associated with a global recessionary phase.
Nevertheless, UNCTAD warns that current global policy dialogues, with an intensified focus on inflation, may overlook more pressing concerns such as trade disruptions, climate change, persistent low growth, under-investment, and heightened inequalities.
China’s economy, projected to grow by 4.9% in 2024, is experiencing its own set of challenges, including external uncertainties, a sluggish housing market, an underperforming labor market, and subdued consumption. This comes against the backdrop of the International Monetary Fund’s latest World Economic Outlook, which also forecasts strongly sustained growth for India, pegged at 6.8% in 2024 and 6.5% in 2025. These growth rates are reflective of India’s enduring strength in domestic demand and an expanding working-age population which offers a firm foundation for sustained economic development.
