OECD boosts India's GDP growth projection for FY24 to 6.3%

The Organization for Economic Cooperation and Development (OECD) has increased India's GDP growth projection for fiscal year 2024 to 6.3%, up from 6% before.

According to the OECD, India, which is one of the G20 emerging-market countries, has witnessed generally positive growth surprises, attributed in part to favorable weather-related agriculture outcomes. The global economy, on the other hand, is expected to grow at 3% in 2023 before dropping to 2.7% in 2024, according to the report.

“A disproportionate share of global growth in 2023-24 is expected to continue to come from Asia, despite the weaker-than-expected recovery in China,” the OECD report noted.

In addition, the OECD increased India's inflation projection to 5.3%, up from 4.8% in June. According to the report, while headline inflation in several nations fell in the first half of 2023 owing to lower food and energy prices, core inflation did not fall much.

“A key risk is that inflation could continue to prove more persistent than expected, which would mean interest rates need to tighten further or remain higher for longer,” the report said.

According to the report, numerous large economies, including India, Indonesia, Mexico, and South Africa, have the opportunity for modest policy easing over the next year.

Meanwhile, the report reduced India's GDP growth projection for FY25 downward to 6% from 7% before.

The OECD recommended caution in monetary policy until strong indicators of long-term relief from inflationary pressures emerged. It also emphasized the need for fiscal policy in preparing for future spending pressures.

The OECD advised that concerns about economic security should not deter governments from capitalizing on opportunities to reduce trade barriers, particularly in the service sectors. “Lowering trade restrictions would boost productivity and growth,” the OECD report said.