India to attract more investments from global corporations, investors in 2024: Goldman Sachs

In a dynamic, volatile global macroeconomic environment where set paradigms are shifting, India, seen as sector-averse, is likely to attract more investments from global corporations and investors.

Goldman Sachs Asset Management in its report titled, ‘Asset Management Outlook 2024: Embracing New Realities’ said India has the advantage of resilient growth and strong demographics. “.. We expect more companies to become important manufacturing partners for global corporations diversifying their supply chains in steel, textiles, chemicals, pharmaceuticals and automotives,” the report made available exclusively to businessline, said.

The Indian economy grew at 7.2 per cent in FY23, while the World Bank has pegged its growth at 6.3 per cent in FY24. In a world buffeted by geopolitical flare-ups and unprecedented inflation, India has managed the pressures relatively better, with little disruption to its stability.

The Goldman Sachs report on the investment outlook for 2024, observed that the pandemic, outbreak of wars and geopolitical tensions, and soaring inflation had created a climate where investors have to dynamically adjust their investment and asset allocation strategies.

“... adjustments will be necessary in a world of greater growth volatility, higher capital costs, and geopolitical instability. The new year promises more return dispersion across asset classes, sectors, and regions, with complex choices and trade-offs,” said the report.

While inflation rates are holding steady globally as well as in India, they are higher than they were two years back and there seems to be little prospect of rate cuts, at least till the end of next year.

In 2024, the key themes that will affect markets and investment strategies globally are - living with higher for longer on the macroeconomic front, a reshaped world arising from geopolitical rivalries, innovations and acceleration in AI, sustainability in investments and thinking differently in portfolio construction.

“We believe investors will need dynamic solutions to successfully navigate change in 2024,” said Michael Brandmeyer, global co-head, and co-chief investment officer of the External Investing Group at Goldman Sachs Asset Management.

Active strategies for alternative investments will be important, along with diversification and risk management. Long-term disruptive trends in sustainability and technological innovation, including artificial intelligence (AI), should lead to exciting new realities.”

Among emerging markets, India’s productivity is expected to get a boost of 0.7 percentage points over the next decade with the use of Artificial Intelligence, compared to a global average of around 1.3 percentage points in productivity growth.

The new year is also important from a geopolitical view as key political elections are scheduled in several countries, including India, the US, the UK, South Africa, Taiwan, and Russia. “Investors and companies should prepare for a range of possibilities in 2024,” the report said.

Goldman Sachs said economies will continue to invest in their economic security over the next 12 months and this is likely to be driven by developed markets “re-shoring”, “friend-shoring” critical supply chains that remain inter-dependent and over-dependent.

Climate action and sustainable investing has gathered pace and there is potential for nations such as China and India to add climate incentives over the coming quarters, the report said.