India to grow 6.7% in 2024, remain one of the few 'bright spots': UN report

While most countries across the globe have entered a slow recession, the Indian economy is expected to grow by 6.7 per cent in the calendar year 2024, emerging as one of the few bright spots, a new UN report has revealed.

The World Economic Situation and Prospectsas of mid-2023report released on Tuesday said India's economy is expected to expand by 5.8 per cent in 2023 and 6.7 per cent in 2024.

It, however, added thathigher interest rates and weaker external demand will continue to weigh on investment and exports in 2023.

Add WION as a Preferred Source

The report noted that while most central banks in the region hiked interest rates in early 2023 to tackle inflation and stabilise exchange rates, the Reserve Bank of India (RBI) applied the brakes after six consecutive hikes, accounting for a cumulativeincrease of 250 basis points since May last year.

"We have kept the policy rate unchanged, this decision was taken based on our assessment of the macroeconomic and financial conditions with reference to information available," said RBI Governor Shaktikanta Das at the time.

The growth projection for India is in line with the estimate made inWorld Economic Situation and Prospects 2023 report launched earlier this year.The January report saidIndia's GDP is projected to grow to 5.8 per cent in 2023.

ALSO READ |RBI applies brakes on repo rate hike, keeps it unchanged at 6.5%

India is the bright spot

Hamid Rashid, chief of theGlobal Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs, commenting on the findings of the report said India remained a 'bright' spot on the horizon.

“India remains a bright spot. Our projection for India hasn't changed since January and we see many positives, including the inflation has come down significantly. We are pretty confident with our forecast right now for the year,” he was quoted as saying by PTI.

WATCH |From cars to homes, spending in India booms as other countries battle rising inflation

×

Inflation rate based on WPI

Rashid may have been referring to the release of the Wholesale Price Index (WPI) which fell to a newthree-year low of(-) 0.92 per cent in April. According to data released by theMinistry of Commerce and Industry on Monday, this is the first instance after July 2020 that the inflation rate based on WPI has slipped into negative territory.

"Decline in the rate of inflation in April 2023 is primarily contributed by fall in prices of basic metals, food products, mineral oils, textiles, non-food articles, chemical & chemical products, rubber & plastic products and paper & paper products," the government noted.

According to the UN report, inflation in India is expected to decelerate to 5.5 per cent in 2023 as global commodity prices moderate.

ALSO READ |India: WPI falls into negative for first time since July 2020, govt cites high base effect as the reason

While India grows rapidly,the world economy is expected to lag, despite a slight uptick from previous gloomy predictions.

"The world economy is now projected to grow by 2.3 per cent in 2023 (+0.4 percentage points from the January forecast) and 2.5 per cent in 2024 (-0.2 percentage points), a slight uptick in the global growth forecast for 2023," read the report.

(With inputs from agencies)

WATCH WION LIVE HERE: