India registered strong investment performance in 2023: UN
United Nations, Jan 5 (PTI) India registered strong investment performance in 2023, driven by government infrastructure projects and multinational investments, the United Nations has said while noting that investment prospects in China face “headwinds” from a struggling property sector.
The UN World Economic Situation and Prospects (WESP) 2024 report, launched here on Thursday, said that investment has been more resilient in developing economies than in developed economies.
Investment in South Asia, particularly in India, remained strong in 2023.
“Investment prospects in China face headwinds from a struggling property sector, though government-led infrastructure investments are partially offsetting the shortfall in private investments. In contrast, India registered strong investment performance in 2023, driven by government infrastructure projects and multinational investments,” the report said.
Among the developing regions, Africa, Western Asia and Latin America and the Caribbean continue to struggle with high borrowing costs and other challenges that hinder investment growth.
The report noted that India is benefiting from growing interest from multinationals, which see the country as a key alternative manufacturing base in the context of developed economies’ supply chain diversification strategies.
In 2022, FDI flows to India rose by 10 per cent to USD 49 billion, making it the third-largest host country for announced greenfield projects and the second-largest for international project finance deals.
The report added that another driver of fixed capital formation in the country is the increased government spending on roads, railways and renewable energy projects, which can have a crowd-in effect on private-sector investment.
According to Reserve Bank of India data, from April to September 2023, government capital expenditure in India increased by 43.1 per cent year-over-year.
The report further said that slowing global demand, unresolved trade tensions between the largest trading partners and geopolitical conflicts are affecting trade flows in the short term. The war in Ukraine and the sanctions imposed on Russia have also shaped global trade patterns.
“Crude oil exports from the Russian Federation, for example, have shifted from the European Union to China and India, which together accounted for close to 75 per cent of the country’s crude oil exports in the first quarter of 2023,” it said, citing data.
Russia’s economy is “increasingly feeling the negative impact of sanctions and declining export revenues. While the country has largely managed to evade the USD 60 per barrel oil price cap imposed by the Group of Seven countries (by utilising a fleet of tankers not covered by traditional Western insurers), it has had to offer steep discounts on the sale of crude to major customers such as China and India,” the report said.
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