India's Economic Growth Forecast for 2025: What the UN Report Reveals

UN Revises India's Economic Growth Forecast

United Nations: The United Nations has adjusted India's economic growth prediction for 2025 to 6.3 percent. Despite this downward revision, India continues to be recognized as one of the fastest-growing large economies, buoyed by strong consumer spending and government investments.

On Thursday, the UN released a report titled 'The World Economic Situation and Prospects as of mid-2025'.

Ingo Pitterle, a Senior Economic Affairs Officer at the UN, stated during a press briefing, "India remains one of the fastest-growing large economies, driven by robust private consumption and public investment, even as growth projections have been lowered to 6.3 percent for 2025."

The report highlights that the global economy is facing significant challenges, including increased trade tensions and policy uncertainties. The rise in tariffs, particularly in the US, is expected to elevate production costs, disrupt global supply chains, and heighten financial instability.

Despite the anticipated slowdown, India's economy is projected to grow by 6.3 percent in 2025, a decrease from 7.1 percent in 2024.

The report emphasizes that strong private consumption, substantial public investment, and healthy services exports will continue to drive economic growth.

While the looming US tariffs may impact merchandise exports, sectors currently exempt—such as pharmaceuticals, electronics, semiconductors, energy, and copper—might mitigate the economic repercussions, although these exemptions may not last indefinitely.

The revised growth forecast of 6.3 percent for India in 2025 is slightly lower than the 6.6 percent estimated in the UN's earlier report published in January. For 2026, India's GDP growth is projected at 6.4 percent.

Unemployment in India remains relatively stable amid consistent economic conditions, although ongoing gender disparities in employment highlight the need for increased inclusivity in workforce participation. The report also notes that inflation in India is expected to decrease from 4.9 percent in 2024 to 4.3 percent in 2025, remaining within the central bank's target range.

The decline in inflation has prompted many central banks in South Asia to initiate or continue monetary easing in 2025. The Reserve Bank of India, which has maintained its policy rate at 6.5 percent since February 2023, began its easing cycle in February 2025. Meanwhile, governments in Bangladesh, Pakistan, and Sri Lanka are anticipated to pursue fiscal consolidation and economic reforms supported by the IMF.

Globally, GDP growth is now projected at just 2.4 percent for 2025, down from 2.9 percent in 2024 and 0.4 percentage points lower than the January 2025 forecast.

"The global economy is experiencing a period of uncertainty. Earlier this year, we anticipated two years of stable, albeit modest, growth, but since then, the outlook has worsened, accompanied by significant volatility across various sectors," stated Shantanu Mukherjee, director of the Economic Analysis and Policy Division at the UN.

He added that global economic growth is expected to be 2.4% for 2025 and 2.5% for 2026.

"This represents a downward adjustment of 0.4 percentage points for each year compared to our January expectations. While this does not indicate a recession, the slowdown is impacting most countries and regions," Mukherjee explained.

Uncertainties surrounding trade and economic policies, coupled with a volatile geopolitical environment, are causing businesses to postpone or reduce critical investment decisions.

These factors are exacerbating existing challenges, such as high debt levels and sluggish productivity growth, further undermining global growth prospects.

The report indicates that the slowdown is widespread, affecting both developed and developing nations. The growth rate in the United States is expected to drop significantly from 2.8 percent in 2024 to 1.6 percent in 2025, with higher tariffs and policy uncertainties likely to hinder private investment and consumption.

China's growth is anticipated to slow to 4.6 percent this year, influenced by weak consumer sentiment, disruptions in export-oriented manufacturing, and ongoing challenges in the property sector.

Other major developing economies, including Brazil, Mexico, and South Africa, are also experiencing growth downgrades due to declining trade, reduced investment, and falling commodity prices.

"The tariff shock poses a significant risk to vulnerable developing nations, slowing growth, diminishing export revenues, and exacerbating debt challenges, particularly as these countries struggle to secure the investments necessary for sustainable long-term development," stated Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs.

For many developing nations, the grim economic outlook jeopardizes job creation, poverty reduction, and efforts to address inequality. For the least developed countries, where growth is projected to decline from 4.5 percent in 2024 to 4.1 percent in 2025, decreasing export revenues, tightening financial conditions, and reduced official development assistance threaten to further diminish fiscal space and increase the risk of debt distress.

Escalating trade tensions are further straining the multilateral trading system, leaving small and vulnerable economies increasingly marginalized in a fragmented global landscape. Strengthening multilateral cooperation is essential to tackle these challenges.

Revitalizing the rules-based trading system and providing targeted support to vulnerable nations will be crucial for fostering sustainable and inclusive development.