Labor gain

The world has been hit by many unknowns in the past four years. As the curtains fall on 2023, the economic environment remains as uncertain as it was at the beginning of the year. Inflation is lagging central bank targets, and the monetary policy is at a critical juncture. Too much tightening can lead to recession and less than required can make inflation entrenched. While the United States (US) Fed seems to be turning dovish, the European Central Bank and the Bank of England remain cautious in their communication. Also, a record 40 countries going into election in 2024 adds a political dimension to the prevailing uncertainty.

To boot, a soft landing is predicted for the global economy in the coming year. S&P Global expects global growth to slow to 2.8% in 2024 from 3.0% in 2023. This is the good part. The worry is that disruptions in trade, supply chains, geopolitical shifts and mounting debt make the global environment fragile and the confidence interval around forecasts wider.

India has done quite well in this volatile environment with gross domestic product (GDP) growth projected to be better than expected in the current fiscal. Outlook for the next fiscal, too, is healthy as per the predictions of multilateral agencies and professional forecasters. We project India's GDP to grow at 6.4% in fiscal 2025. The medium-term prospects are also looking good-our base case scenario sees 6.7% per year GDP growth till the end of this decade.