India to remain fastest growing major economy in 2024: UN

New Delhi: India's economic growth will decline marginally to 6.2 per cent in the current year from the projected expansion of 6.3 per cent recorded in 2023, but will maintain its position as the fastest growing major economy in the world, the United Nations said in a report on Friday.

Robust domestic demand and strong growth in manufacturing and services sectors will help sustain India's growth momentum, even though the global economy is projected to witness a sharp deceleration.

The global economic growth is projected to slow from an estimated 2.7 per cent in 2023 to 2.4 per cent in 2024, trending below the pre-pandemic growth rate of 3 per cent, as per the UN World Economic Situation and Prospects 2024 report.

"India remains a bright spot," said Nagesh Kumar, Director, Institute for Studies in Industrial Development.

Kumar said India's GDP growth in 2024 is likely to be even higher than the UN projections as general elections generally act as a stimulus for the economy. "General elections normally give a boost to the economy. I would not be surprised if we grow at 7 per cent or even higher in 2024," he added.

As per the UN flagship economic report, India's headline retail inflation is set to ease sharply to 4.5 per cent in the current calendar year from a high of 5.7 per cent in 2023.

Inflationary pressure is expected to ease globally. It is projected to decline to 3.9 per cent in 2024 from an estimated average of 5.7 per cent in 2023. "Price pressures are, however, still elevated in many countries and the escalation of geopolitical conflicts risks further increase in inflation," the report noted.

In about a quarter of all developing countries, annual inflation is forecast to exceed 10 per cent in 2024, diminishing the purchasing power of households.

The report further noted that the central banks worldwide continue to face difficult trade-offs in striking a balance between inflation, growth, and financial stability. "Developing country central banks will need to deploy a broad range of macroeconomic and macroprudential policy tools to minimise the adverse spillover effects of monetary tightening," it said.

The economic growth of the United States is projected to dip to 1.4 per cent in 2024 from 2.5 per cent in 2023. However, in the European Union, GDP is projected to grow by 1.2 per cent in 2024, up from an estimated 0.5 per cent in 2023. A pick-up in consumer spending – against the backdrop of easing inflation and rising real wages – is expected to support the mild recovery in the EU countries.

China's economic growth is estimated to decline to 4.7 per cent in 2024 from 5.3 per cent in the previous year. Economic growth in Japan is projected to slow from 1.7 per cent in 2023 to 1.2 per cent in 2024 despite accommodative monetary and fiscal policy stances.

Risks to the outlook remain largely tilted to the downside. Possible "higher-for-longer" interest rates in major developed countries could lead to tighter global financial conditions, pushing up borrowing costs and increasing the risks of debt distress and balance-of-payments crises, particularly in a few South Asian economies, the report noted.