Solid domestic demand growth to continue in India for next two years: OECD

Economic growth in G20 emerging markets, including India, is expected to remain steady, according to the latest report from the Organisation for Economic Co-operation and Development (OECD).

The Paris-based research body highlighted that domestic demand in emerging economies, such as India and Indonesia, will maintain its momentum.

“Solid domestic demand growth is projected to continue in India and Indonesia over the next two years,” the report stated.

The OECD has also revised India’s GDP growth forecast upward by 10 basis points, pegging it at 6.7 percent in 2024-25 and 6.8 percent in 2025-26, a 20-basis-point increase. Indonesia’s economy is projected to grow at 5.1 percent in 2024 and 5.2 percent in 2025.

India’s GDP grew by an impressive 8.2 percent during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.
Several global rating agencies and multilateral organizations have similarly raised their growth forecasts for India.

In China, economic growth is expected to be supported through the second half of 2024 by increased government spending, bolstered by recent local government bond issuances.
However, challenges such as the prolonged downturn in the real estate sector, weak social safety nets, and subdued consumer confidence are likely to limit private consumption. China’s GDP is forecasted to grow by 4.9 percent in 2024 and 4.5 percent in 2025.

Brazil is expected to maintain its growth momentum in the first half of 2024, driven by higher fiscal spending.

Overall, economic growth in G20 nations, including the United States, Brazil, India, Indonesia, and the United Kingdom, remains stable.

On the inflation front, the OECD projects a sharp decline in aggregate consumer price inflation for G20 economies, primarily due to lower commodity prices and easing labor cost pressures. Headline inflation is expected to drop from 6.1 percent in 2023 to 5.4 percent in 2024, and further down to 3.3 percent in 2025.

“Inflation in emerging-market economies is projected to remain generally higher than in advanced economies, though it will also ease gradually,” the OECD said, with inflation expected to reach target levels in most G20 countries by the end of 2025.