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UN Upgrades India's Growth Forecast to 7.4% Amid Global Challenges

A new UN report significantly upgrades India's GDP growth estimate for last year to 7.4%, maintaining its status as the world's fastest-growing major economy. UN economists attribute the strong performance to robust consumer demand, significant public investment, and a favorable agricultural harvest that helped curb inflation. The impact of US tariffs has been softened by India's diversification of export markets to the EU and Middle East, with services exports remaining particularly resilient. Looking ahead, the report highlights artificial intelligence as a key area where India can leverage its skilled manpower for future productivity gains.

Key Points: UN Sees India's Growth at 7.4%, Fastest Major Economy

  • GDP forecast upgraded to 7.4% for last year
  • Strong consumer demand and public investment cited
  • Resilient services exports offset tariff impacts
  • AI presents new opportunities for skilled workforce
3 min read

India seeing 'exceptionally high growth' in challenging global environment: UN economist

UN economists cite strong demand, investment, and AI potential as India's GDP forecast is upgraded to 7.4% for last year, maintaining its top growth rank.

"reflects an exceptional combination of factors which have all worked in the direction of stronger growth - Ingo Pitterle"

United Nations, Jan 9

India is seeing "an exceptionally high growth" in a "relatively challenging global environment", according to Senior Economist Ingo Pitterle.

He made the observation at the release of the UN's World Economic Situation and Prospects 2026 (WESP) report on Thursday, which said that India was keeping its rank as the world's fastest-growing major economy with 6.6 per cent gross domestic product (GDP) growth.

Pitterle, who heads the UN's Global Economic Monitoring Branch, said that the estimate for India's gross domestic product (GDP) growth for last year was "significantly upgraded" by 1.1 per cent to 7.4 per cent from the projection made in the mid-term WESP last May.

Similarly, the projection for this year was raised by 0.2 per cent to 6.6 per cent.

The upgrade, he said, "reflects an exceptional combination of factors which have all worked in the direction of stronger growth in India, of a very dynamic economy".

One of the factors was consumer demand, and another was investment, with public investment being strong, he said.

Inflation falling significantly, "partly due to a very abundant harvest", enabled the central bank to lower interest rate and provide a monetary impulse, was another contributory factor, he said.

"We had a positive fiscal impulse to investment, and we had a positive impact on GDP from the agricultural sector, on top of all the other strong growth drivers India was having", he Pitterle.

The director of the Economic Analysis and Policy Division, Shantanu Mukherjee, said that the impact of the tariffs imposed on India by US President Donald Trump was softened by the diversification of India's export markets to the EU (European Union) and to the Middle East.

"One of the strongest exports from India at this point in time is services exports, and this has remained resilient, even if merchandise exports have been affected by tariffs", he added.

Moreover, the "domestic drivers of growth have been exceptionally strong, and there has been good revenue collection as well", he said.

Trump has imposed a tariff of 50 per cent on India, although there are exemptions and varying rates for certain sectors.

The WESP put a spotlight on artificial intelligence, saying the "rapid developments present both opportunities and challenges".

Mukherjee said India could take advantage of the opportunities from AI by strengthening its services exports and "rely on its skilled manpower, to develop some of the applications that will take AI into a productivity boosting factor, rather beyond where it is right now".

- IANS

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Reader Comments

S
Shreya B
Good to see international recognition. But I hope this growth translates to better jobs and higher incomes for the middle class and farmers. The report mentions "abundant harvest" helping inflation, but are farmers getting fair prices? That's the real question.
R
Rohit P
The diversification of exports away from over-reliance on any single market (like the US) is a very smart strategic move. Kudos to our policymakers. Services exports and AI are our future strengths.
M
Michael C
As someone working in the tech sector in Bangalore, the AI part is most exciting. India has the talent pool to become a global hub for AI development and applications. This could be our next big IT boom.
P
Priya S
While the numbers look great, I feel the growth is not evenly distributed. Cities are booming, but what about small towns and villages? Infrastructure and manufacturing need to spread beyond the usual hubs. The report is positive, but ground reality can be different.
K
Karthik V
Strong domestic demand is the key. When our own people have the purchasing power, it makes the economy less vulnerable to global shocks. Lower interest rates should hopefully boost housing and auto sectors further. Good times ahead!

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