June 24, 2024
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India’s Projected GDP Growth Down To 6.4%, Yet Fastest-Growing Major Economy: UN

According to a UN report, as the Ukraine conflict has an impact on global GDP, India is expected to grow by 6.4 percent in 2022, slower than last year’s 8.8 percent but still the fastest-growing major economy, with higher inflationary pressures and uneven labour market recovery stifling private consumption and investment.

In its World Economic Situation and Prospects (WESP) report released on Wednesday, the UN Department of Economic and Social Affairs stated that the war in Ukraine has upended the fragile economic recovery from the pandemic, triggering a devastating humanitarian crisis in Europe, raising food and commodity prices, and exacerbating inflationary pressures globally.

The global economy is now expected to grow by only 3.1 percent in 2022, down from a forecast of 4.0 percent in January 2022. With sharp increases in food and energy prices, global inflation is expected to rise to 6.7 percent in 2022, twice the average of 2.9 percent between 2010 and 2020, according to the report.

The outlook for South Asia has deteriorated in recent months, according to the report, due to the ongoing conflict in Ukraine, rising commodity prices, and potential negative spillover effects from US monetary tightening.

In 2022, regional economic output is expected to grow by 5.5 percent, which is 0.4 percentage points less than the January forecast.

“India, the region’s largest economy, is expected to grow at 6.4 percent in 2022, down from 8.8 percent in 2021, as higher inflationary pressures and an uneven labour market dampen private consumption and investment,” the report said.

India’s growth rate is expected to be 6% in fiscal year 2023.

Higher prices and shortages of farming inputs, such as fertilisers, are expected to persist in the region, negatively impacting Bangladesh, India, Pakistan, and Sri Lanka’s agricultural sectors, according to the report.

It stated that, in addition to higher energy prices, rising food prices will likely increase food insecurity in the region. Inflation in the region is expected to increase to 9.5 percent in 2022, up from 8.9 percent in 2021.

Tighter external financial conditions, according to the report, will hurt regional growth prospects, particularly for countries with high exposure to global capital markets and debt distress or debt default risks.

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