Is India still a bright spot? IMF upgrades growth, but economists say it will be a bumpy ride
Pedestrians walk towards the Chhatrapati Shivaji Terminus train station at dusk in Mumbai, India, on Wednesday, Oct. 4, 2023.
Bloomberg | Bloomberg | Getty Images
The International Monetary Fund has raised its growth forecast for India, saying the country’s growth will remain strong in 2023 and 2024 — but analysts warn there will be headwinds ahead.
According to the IMF’s October update of its World Economic Outlook., India’s economy will grow 6.3% in 2023, an increase from an earlier forecast of 6.1%.
Economists who spoke to CNBC are also bullish about India’s growth, attributing the economy’s growth to an increase in consumption, infrastructure spending, and more businesses being set up — but they say geopolitical risks and inflation concerns will be challenging.
“India will continue to be a bright spot in the global economic picture,” Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis said.
The country “has been favored by foreign investors in recent years, reflecting its promising long-term outlook helped by a youthful demographics and a fast-expanding middle class. We expect such a trend to continue,” she told CNBC.
Consumer spending remains one of the biggest growth drivers in the world’s most populous nation, she added.
India’s consumer market is set to become the world’s third largest by 2027 as the number of middle to high-income households rise, according to a report by BMI, a Fitch Solutions research unit.
“India is on the map. There is a lot of pent-up demand and sentiment is very positive. There is a sense that India is back on the frontline and the propaganda in the media helps consumption too,” she added.
India’s government has “taken several steps to improve businesses and this is attracting global and local investors,” said Nilesh Shah, managing director at Kotak Mahindra Asset Management.
“The China-plus-one strategy is also pushing relocation of global supply chains and India will be a beneficiary,” he added.
India is on the map. There is a lot of pent-up demand and sentiment is very positive.
Alicia Garcia-Herrero
chief economist for Asia Pacific, Natixis
The optimism in India’s growth story is partly because more Indians are choosing to work or set up businesses in the country rather than “moving to the Western world in search for better opportunities,” Shah said.
“The West is less appealing than it used to be,” Garcia-Herrero said. “And India is more appealing than it used to be — at least for very talented people.”
Headwinds remain
While the IMF maintained it’s 2024 projection of 6.3% growth in India, economists are expecting the country to face a slew of headwinds.
“Widening current account deficit, resurging inflation and heightened geopolitical tensions would be the major headwinds for India,” Garcia-Herrero warned.
Although India’s “pre-election environment is quite conducive to growth,” the Reserve Bank of India’s loose monetary policy will be “creating future problems,” the economist said.
“India is not increasing productivity as much as needed to make their growth sustainable over time. But this will only become a problem in the next two decades, it’s not an immediate issue.”
People walk across a damaged road following flash floods in the Faqir Gujri area, on the outskirts of Srinagar on July 23, 2023.
Future Publishing | Future Publishing | Getty Images
Extreme weather events will also impact India’s growth.
Heatwaves and droughts have caused water levels in southern Indian reservoirs to fall below 10 years average, causing an adverse effect on agriculture and rural recovery, Kotak’s Shah pointed out.
Geopolitical tensions have intensified from rising tensions between India and Canada, as well as the attack on Israel by Palestinian militant group Hamas which caused oil prices to spike by more than 4% on Monday.
“India imports more than 80% of its oil consumption, so higher prices will impact India’s trade and fiscal deficit, inflation and growth adversely,” Shah said.
Although economists remain optimistic about India’s growth, Garcia-Herrero emphasized the importance of foreign investments to keep the economy going.
“In India’s position as the leader of the global south competing with China, India needs more foreign investments to create more manufacturing jobs,” she said.
Global growth slows
In the report published Tuesday, the IMF said the global economy will continue to recover at a slow pace as a consequence of the Ukraine war, high inflation and the aftermath of the pandemic.
Its projections show that global growth will slow from 3.5% in 2022 to 3% this year, before falling further to 2.9% in 2024.
“Growth remains slow and uneven, with growing global divergences. The global economy is limping along, not sprinting,” the fund said.
The IMF also raised its 2023 U.S. growth projections by 0.3 percentage points from its July report to 2.1%, and hiked next year’s forecast by 0.5 percentage points to 1.5%.
Kia is extending one of its biggest promotions yet, knocking over $10,000 off every EV in its lineup.
Kia knocks $10,000 off EV models
Who said electric vehicles would get more expensive after the $7,500 federal tax credit ended? Kia must not have gotten the memo.
Last month, Kia launched a new promotion, offering a $10,000 customer cash discount for all EVs, including the EV6, EV9, and Niro EV. The discount knocks nearly 25% off MSRP on Kia’s cheapest model, the Niro EV. On the entry-level EV6, it’s 23% off MSRP, while $10,000 off the EV9 is about an 18% discount.
The discounts ended on December 1, but Kia has extended them for at least another month. During its Season of New Tradition sales event, Kia is now offering even more savings.
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New Holland’s already excellent C314 mini track loader is even better for 2026 thanks to the debut of a new, all electric version that offers quiet, low maintenance, and emission-free running for round-the-clock operation.
State and federal governments may still be hashing out emissions laws and ZEV requirements, but it’s the municipal governments that write quiet our laws and noise ordinances, and it’s those laws that construction crews are struggling to work around as they bid for lucrative urban jobs. New Holland understands those construction customers’ needs, and its new C314X Electric mini track loader (announced at last month’s Agritechnica) is designed specifically for them.
“We launched the C314 two years ago, and it has become known for its excellent features,” says Francesca Asteggiano, Europe Construction Brands. “Today, we’re developing an electric version to meet growing demand for quieter, more compact machines — reinforcing our commitment to sustainability and innovation.”
C314X Electric
New Holland’s C314X Electric is designed and built in-house as the zero-emission evolution of the diesel-powered C314, and is powered by a 23.5 kWh li-ion battery that sends power to three electric motors — two drive motors and a single hydraulic motor for the boom.
The company says the new C314X has a rated operating capacity that matches the diesel unit at 460 kg (~1014 lbs.) and a hinge pin height of 2.2 m (~7.2 ft.).
Though still “just a prototype” at this point, CASE and New Holland products have a history of making it to production. If when it does, company reps say it will be available in two undercarriage configurations, a “narrow track” version 890 mm wide that can fit through garden gates and man doors, and wide track version 1026 mm wide for heavier duty outdoor and agricultural work.
The stand-on machine uses controls that will be familiar to any mini loader operator — especially those with experience behind the controls of the diesel C314 — and all the implements and attachments that work on the diesel version bolt up to the C314X Electric, making it ideal (the company says) for livestock and horticultural farmers, landscape contractors and residential construction operations, thanks to multiple compatible attachments to ensure full versatility to dig, load, drill, and more.
Stay tuned for pricing and availability, likely set to be announced during ConExpo 2026.
SOURCE | IMAGES: New Holland.
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss Tesla allowing texting and driving on FSD v14, Trump killing CAFE’s MPG standard, an Aptera update, and more.
The show is live every Friday at 4 p.m. ET on Electrek’s YouTube channel.
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