India to retain fastest growing major economy rank in 2024: Think tank

The US think tank’s leading economic index (LEI) for India rose by 1.2 per cent in May this year to 158.8, more than reversing the two consecutive contractions of 0.4 per cent and 0.3 per cent in March and April.

As a result, the LEI rose by 2.9 per cent over the six-month period from November 2023 to May 2024, moderately stronger than the 2.3 per cent recorded over the previous six months.

Its coincident economic index (CEI) for India rose by 0.9 per cent in May 2024 to 153.5, after an increase of a 6.1 per cent in April. The index rose by 5.6 per cent over the six-month period from November 2023 to May 2024, a complete reversal from the 1.4-per cent contraction over the prior six-month period.

The LEI provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term, whereas the CEI offers an indication of the current state of the economy.

“Nearly all components, save the PMI: services business activity, contributed positively to the index. Most notably, bank credit to the commercial sector accounted for a large proportion of the increase in the LEI, followed by merchandise exports and the real effective exchange rate (REER). Additionally, all components, except the REER, have increased over the past six months,” said Ian Hu, economic research associate with the think tank.

“Furthermore, the six- and twelve-month changes of the LEI remained strong, suggesting that growth momentum is likely to sustain throughout 2024. For these reasons, The Conference Board forecasts India to retain its position as the fastest growing major economy in 2024, with an annual GDP growth rate of 6.9 per cent,” he added.

The eight components of the LEI for India are interest rate spread, BSE: index: monthly average: SENSEX, REER: 40 currencies, M3: bank credit to commercial sector, merchandise exports, cargo handled, industrial production of capital goods, and India PMI: services business activity.

The three components of the CEI for India are industrial production, total imports and vehicle sales, and passenger vehicles.

Fibre2Fashion News Desk (DS)