India gaining more investments as foreign investment declines in China says UN expert
- In Current Affairs
- 12:30 PM, May 17, 2024
- Myind Staff
The United Nations has highlighted India's robust economic growth, recognising the country as a prime investment destination for many Western companies. This shift comes as foreign investment in China decreases. Hamid Rashid, Chief of the Global Economic Monitoring Branch at the UN's Department of Economic and Social Affairs (UN DESA), explained that this trend is significantly benefiting India.
During a briefing on the mid-year update of the World Economic Situation and Prospects 2024, Rashid noted that India's growth projections for 2024 have been revised upwards. The country's economy is now forecasted to expand by nearly seven percent this year.
Rashid stated, "India is also benefiting from more investments coming into India from other Western sources as less and less foreign investment is going into China. India has become an alternative investment source or destination for many Western companies. I think that is also benefiting India."
The report, released on Thursday, forecasts India's economy to grow by 6.9 percent in 2024 and 6.6 percent in 2025. This growth is driven mainly by strong public investment and resilient private consumption. While subdued external demand may continue to affect merchandise export growth, exports of pharmaceuticals and chemicals are expected to perform strongly.
The mid-year update's 6.9 percent growth projection for India marks an upward revision from the 6.2 percent GDP forecast made by the UN in January this year.
UN expert Hamid Rashid highlighted India's economic outlook, noting that reduced inflation has eased fiscal constraints, allowing both monetary and fiscal support to stimulate growth. He cited last year's growth momentum and robust exports as key drivers.
Rashid mentioned that India's special import arrangements with Russia are helping keep import costs down, contributing to the positive outlook. He affirmed confidence in the revised growth projections of 6.9% for 2024 and 6.6% for 2025, praising India's robust performance and improvement in growth outlook.
Rashid noted that most growth in developing economies is driven by South and East Asian regions. The update projected India's consumer price inflation to decrease from 5.6% in 2023 to 4.5% in 2024, within the central bank's target range.
Other South Asian countries are also expected to see declining inflation rates in 2024, with figures ranging from 2.2% in the Maldives to 33.6% in Iran. Despite this, food prices remained high in early 2024, especially in Bangladesh and India.
China's growth outlook has slightly improved to 4.8% for 2024, up from the 4.7% projected in January, but down from 5.2% in 2023. The boost from post-pandemic consumer demand has waned. While policy support may enhance public infrastructure and strategic sector investments, the property sector remains a significant risk.
Image source: PTI
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