OECD raises India’s FY24 GDP growth forecast to 6.3%

The Organisation for Economic Cooperation and Development (OECD) has raised India’s GDP (gross domestic product) forecast for 2023-24 to 6.3% from 6% projected earlier. However, the country's GDP growth for FY24-25 has been revised downward to 6% from 7% estimated earlier.

Among the G20 emerging-market economies, growth surprises have mostly been “positive” so far this year in India, Brazil, and South Africa, the Paris-based intergovernmental organisation says in its latest Interim Economic Outlook.

The report highlights the GDP growth in Asia's biggest emerging-market economies, India and Indonesia, is projected to remain relatively steady in 2023 and 2024: around 6% for India and 5% for Indonesia. As per the OECD estimates, in both fiscal years, India will remain the fastest-growing economy in the world, followed by China and Indonesia.

On the global level, the world economy is expected to grow by 3.0% in 2023, before slowing down to 2.7% in 2024. "Growth was comparatively robust in the United States and Japan, but weak in most of Europe, particularly Germany," the report finds out.

Growth in China has, however, lost momentum, with the initial impetus from reopening fading and structural problems in the property sector continuing to weigh on domestic demand.

The OECD says signs of a slowdown in Chinese economic activity are also a "concern" given China’s importance for global growth, trade, and financial markets. India’s neighbouring country, as the OECD report says, is going through its "own cyclical and structural stresses".

In this context, growth in China is seen as “slowing” through this year and next after an initial rebound in early 2023 from reopening. "Growth in China is expected to be held back by subdued domestic demand and structural stresses in property markets, easing to 5.1% in 2023 and 4.6% in 2024."

On inflation, the OECD interim report says the headline inflation is declining across the world, but core inflation remains "persistent" in many economies, held up by cost pressures and high margins in some sectors. For India, the inflation forecast has been revised to 5.3% in 2023-24, up from its previous estimate of 4.8% in June 2023.

OECD says in 2023 and 2024, inflation will moderate gradually but will remain above central bank objectives in most economies. The OECD estimates show that headline inflation in the G20 economies is projected to ease to 6% in 2023 and 4.8% in 2024, with core inflation in the G20 advanced economies declining from 4.3% this year to 2.8% in 2024.

Annual GDP growth in the United States is projected at 2.2% in 2023 and 1.3% in 2024, with the slowdown driven by cooler labour markets and more generally the effects of tighter monetary policy. In the euro area, where demand is already subdued, GDP growth is projected to ease to 0.6% in 2023, and edge up to 1.1% in 2024.