Context

UN Trade and Development (UNCTAD) in its recently released report noted that Indian economy grew by 6.7% in 2023 and is expected to expand by 6.5% in 2024.

• UNCTAD’s flagship report ‘2024 Financing for Sustainable Development Report: Financing for Development at a Crossroads’ was recently launched.
• The report highlights the major financing challenges lying at the heart of the current sustainable development crisis.

Key Highlights of the UNCTAD Report

The following are key highlights on the Indian economy included in the UNCTAD report

Status of Indian Economy:

• Strong Investment: The report highlights that investment in South Asia, particularly in India  remains strong and India maintains its position as one of the fastest-growing major economies.
• India as Manufacturing base: The report highlights a significant trend of multinational companies setting up manufacturing in India to diversify their supply chains away from China, which is expected to boost Indian exports.
• Impact on Imports: Setting up manufacturing bases in India would moderate the prices of commodities and would benefit India’s import bill.

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Monetary and Fiscal Policy:

• Interest Rates: UNCTAD report mentioned that the Reserve Bank of India is likely to maintain current interest rates in the near term.
• Public Spending: While public consumption spending is restrained, this is offset by robust public investment, which is driving India’s economic expansion.

Regional Status:

• Southern Asia: Economic growth in Southern Asia is more subdued compared to India. Countries like Bangladesh, Pakistan, and Sri Lanka are under IMF programs that require strict monetary and fiscal policies, impacting low-income households the most.

Global Economic Outlook:

• Growth Projections: Global growth is projected at 2.6% for 2024, slightly slower than 2.7% in 2023. This makes 2024 the third consecutive year in which the global economy will grow slower than before the pandemic when the average rate for 2015–2019 was 3.2%.
• Stability in Major Economies: Major economies, such as China, India, Indonesia, the Russian Federation, the United States, among others – escaped the financial crisis predicted earlier in the year, helping the global economy to grow at a modest rate of 2.7%.
• China’s Economic Challenges: The report warns of economic challenges for China which includes uncertainties in external markets, a struggling housing market, an under-performing labor market and weak consumer spending. 
  • Its economic growth is expected to grow 4.9% in 2024

Policy Concerns:

• Focus on Inflation: Current policy discussions are centered on inflation, with hopes that monetary easing might address broader economic issues.
• Neglected Issues: There is a growing concern that issues like trade disruptions, climate change, low growth, under-investment, and inequalities are not being adequately addressed.

About the UNCTD – United Nations Conference on Trade and Development 

• It is a permanent intergovernmental body and the leading institution of UN dealing with trade and development,
• Established: By the United Nations General Assembly in 1964 and headquartered in Geneva, Switzerland.
• Objective: It aims to maximize the benefits of globalization and liberalization while reducing the costs to the weaker economies.
  • UNCTAD’s work focuses on four main areas: trade and development, investment and enterprise, technology and innovation, and macroeconomics and development policies.
  • It supports vulnerable economies by helping them integrate beneficially into the global economy.
  • UNCTAD also focuses on improving the competitiveness and economic diversification of these economies.
• Reports published by the UN Trade and Development
  • Trade and Development Report
  • World Investment Report
  • The Least Developed Countries Report