India: Fastest Growing Economy in 2024

In the final three months of 2023, India’s GDP increased by a staggering 8.4%, going over and beyond analyst’s predictions of 6.6%. This places India as the fifth largest economy globally, with a GDP of $4.113 trillion. By 2027 they are set to rise to third place, overtaking Germany and Japan, who currently have GDPs valued at $4.509 trillion and $4.2 trillion respectively.

Due to this surge, Moody’s predicted GDP expansion in 2024 rose from 6.1% to 6.8%. To put such growth into perspective, Germany’s economy is expected to grow only 0.2% this year and Japan is expected to grow 2%. Even the USA, with the largest economy in the world with a GDP valued at $28.18 trillion, is only expected to grow by 2.2% this year. This places India’s growth at an incredible rate.

There are several reasons why India has experienced this much growth. The country’s manufacturing sector expanded by 11.6%, and as a result, private consumption rose by 3.5%. Modi has recently been creating incentives to increase the production of electronics and smartphones, as well as a boost in infrastructure. This was balanced by an interim budget passed by the Indian government in February 2023, slowing down the progress of this infrastructure to make sure of financial consolidation in this matter. This allowed for strong, unhindered economic growth.

“Robust goods and services tax collections, rising auto sales, consumer optimism and double-digit credit growth suggest urban consumption demand remains resilient. On the supply side, expanding manufacturing and services PMIs add to evidence of solid economic momentum,” was stated in Moody’s report.

Quote sourced from:
The Economic Times

In a few months, a general election will be held in India, and Modi is looking to a third term as the prime minister. This recent economic growth, led by Modi, may be helpful in this regard.

However, this economic growth will still keep Indian banks cautious as they struggle to combat inflation and keep it at 4%. Inflation in India is especially common with staple foods, such as onions and tomatoes.

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