India's GDP: The world's fastest-growing major economy lives up to its billing

New Delhi/London
CNN
—

India reported surprisingly strong economic growth numbers, ending 2023 on a high note and giving a major boost to Prime Minister Narendra Modi just weeks before nationwide elections.

GDP in the world's fastest-growing major economies rose 8.4% in the last three months of 2023 compared to the previous year, up from 2023 growth. 7.6% from June to September, the country's statistics office said He said Thursday.

The recent increase is much stronger than analysts and media expected The Indian economy “ended last year with a bang,” Thammashi De Silva, assistant India economist at Capital Economics, wrote in a note.

She added: “This pace of growth was the strongest among major economies in the last quarter.”

The data will boost optimism about the economic prospects of the world's most populous country. According to a separate report released on Wednesday from real estate consultancy Knight Frank, the number of wealthy Indians, with a net worth of at least $30 million, will rise by 50% over the five years to 2028, the largest increase globally.

the International Monetary Fund It expects the Indian economy to expand by 6.5% in 2024, but the Modi government has a much higher estimate of 7.6% for 2024. The fiscal year until next March.

“Strong GDP growth of 8.4%…demonstrates the strength and potential of the Indian economy,” Modi said He said on X Thursday. “Our efforts will continue to achieve rapid economic growth that will help Rs 140 lakh crore [1.4 billion] Indians are living a better life.”

Sustained expansion would quickly propel India to the top of the rankings of the world's largest economies. Analysts at Jefferies expect the country to become the world's third-largest economy by 2027, up from fifth place currently.

India is also widely seen as an alternative to China for countries and companies looking to diversify their supply chains, especially as the relationship between Washington and Beijing deteriorates.

Modi's government is seeking to attract multinational companies to set up factories in the country, spending billions to develop roads, ports, airports and railways.

Some of the world's largest companies, including Apple (Camel) supplier Foxconn, is already expanding its operations there. Tesla (TSLA) CEO Elon Musk said last June that his company was We look forward to investing in India “as soon as humanly possible”.

The Modi government on Thursday approved investment of more than $15 billion to build three semiconductor factories by companies including the Tata group, marking a major step towards its goal of making India an electronics manufacturing hub.

the The factories, known as Fabs, are expected to create 20,000 high-tech jobs and about 60,000 indirect jobs, the government said in a statement. He Said The investment was a “giant leap” for India's semiconductor ambitions.

“India already has deep chip design capabilities. With these units, our country will develop capabilities in chip manufacturing,” the statement said.

Despite the euphoria Regarding the latest growth figures, economists advise caution when reading the data.

“All that glitters is not growth,” Nomura books In a note on Friday. “Underlying growth is weaker than the headline suggests.”

He added that consumption was still lagging behind and that the agriculture sector, which contributes 16% to India's GDP and is a major source of employment, was performing poorly.

Economists at HSBC said there was a need for “calm”, even as they acknowledged that the country was “growing at an astonishing pace”.

“India remains an oasis of strong growth and macro stability against a volatile global backdrop.” they wrote in a note on Friday.

Capital Economics' De Silva noted that the momentum behind India's hot economic growth “may fade somewhat”, as weak global growth weighs on exports, while tougher restrictions on unsecured lending in the country may… Limit household spending.

She added: “But any slowdown in growth will be moderate, especially since the infrastructure campaign implemented by the government is likely to support activity.”