UN World Economic Situation and Prospects Report/WESP: Implications for India and South Asia

UN World Economic Situation and Prospects Report/WESP: Implications for India and South Asia

Question: A recent UN report has been released namely the World Economic Situation and Prospects report. Examine the implications of the report for India’s and South Asia’s economic growth and development

A. Implications for India

• According to the WESP report, Indian economic growth will exceed that of China soon, with GDP expected to reach 7.7% in 2016

• The WESP report also says India will aid in accelerating economic growth in South Asia

• Mid year WESP update has indicated that Indian economy is projected to grow by 7.6% in 2015 and 7.7% in 2016

• India is poised to overtake China, as per the report

• China is projected for 7% growth in 2015 and 6.8% growth in 2016

B. Implications for South Asia

• Report has termed South Asia’s economic outlook as mostly favourable

• Economies in this region are projected by the report to experience strengthening of growth in 2015-2016 on the basis of greater domestic consumption and investment and increase in exports

• South Asia’s GDP is projected for 6.7% growth in 2015 and 6.9% growth in 2016 up from 6.3% in 2014

• This revision reflects India’s higher growth trajectory: Growth prospects have also improved for Iran and Pakistan moderately though significant uncertainties remain for the two nations

• Across South Asia, increasing household consumption and recovery of investment is expected to drive growth and expansion

• Demand in the private sector will be underpinned by benevolent macroeconomic environment including lower inflation as per the report for South Asia

• Average inflation in South Asia is also projected by the report to fall to lowest level in 10 years, following recent decline in food and oil prices

• Monetary policy has become expansionary in several nations such as India and Pakistan

• While global economy will grow at modest pace, South Asian economies will face the following challenges:

- Socio-political unrest
- Infrastructure deficits
- Energy shortages

Facts and Stats

• The WESP report is published at the beginning of each year by the combined efforts of

- UN Department of Economic and Social Affairs.
- UN Conference on Trade and Development/UNCTAD
- 5 UN regional commissions.
- World Tourism Organisation/UNWTO

• Report predicts global consumer price inflation will average 2.5% which is the lowest level since the year 2009

• Oil prices are expected to recover and global activity is projected to accelerate with average inflation accelerating to 3% in 2016