India is world's top economic performer: UN report

United Nations, Jan 14: “India’s recovery is on a solid path”, the UN said reporting that the country recorded the highest estimated growth rate among the major economies last year and is set to be on the same trajectory during this year and the next.

The UN’s annual World Economic Situation and Prospects (WESP) report estimated the growth rate of India’s gross domestic product (GDP) at 9 percent last year and forecast it to moderate to 6.7 percent this year and 6.1 percent next year but still retain the highest growth rates among the large economies.

In 2020, the year the Covid-19 pandemic struck the world, India’s economy had shrunk by 7.1 percent – a negative growth rate – according to the report.

China, which came next among the large economies, was estimated to have grown by 7.8 percent last year and forecast to grow by 5.2 percent this year and 5.5 percent next year.

Overall, the global economy’s growth was estimated to be 5.5 percent last year, bouncing back from a shrinkage of 3.4 percent in 2020.

The growth projections are 4 percent this year and 3.5 percent in 2023.

The report said: “India’s economic recovery is on a solid path, amid rapid vaccination progress, less stringent social restrictions and still supportive fiscal and monetary stances.”

The WESP raised India’s growth estimate for last year by 1.7 percent and the growth projection for this year by 0.8 percent from the expectations in its report a year ago.

It ascribed slowing down of growth from 9 percent last year to 6.7 percent this year to waning base effects.

While “robust export growth and public investments underpin economic activity”, the WESP warned that “high oil prices and coal shortages could put the brakes on economic activity in the near term”.

“It will remain crucial to encourage private investment to support inclusive growth beyond the recovery,” it advised.

“Inflation is expected to decelerate throughout 2022, continuing a trend observed since the second half of 2021 when relatively restrained food prices compensated for higher oil prices,” the report said while attaching a note of caution: “A sudden and renewed rise in food inflation, however, due to unpredictable weather, broader supply disruptions and higher agricultural prices, could undermine food security, reduce real incomes and increase hunger across South Asia) region.”

The report estimated India’s consumer price inflation at 5.9 percent last year and is projected to go down to 5.6 percent this year and 5.3 percent next year.

The WESP said that it expected the Reserve Bank to raise interest rates throughout this year.

In its snapshot of the world economy, the report said: “The global economic recovery is facing significant headwinds amid new waves of Covid-19 infections, persistent labor market challenges, lingering supply-chain challenges, and rising inflationary pressures.”

“The momentum for growth – especially in China, the United States and the European Union – slowed considerably by the end of 2021, as the effects of monetary and fiscal stimuli began to recede and major supply-chain disruptions emerged,” according to the report.