India's GDP growth revised downward to 6.3% for 2025, country remains one of fastest-growing large economies: UN

United Nations: India’s economic growth forecast for 2025 has been revised downward to 6.3 per cent, and despite a projected moderation, the country remains one of the fastest-growing large economies, supported by resilient consumption and government spending, the United Nations has said.

The UN on Thursday launched a report titled 'The World Economic Situation and Prospects as of mid-2025'.

“India remains one of the fastest growing large economies, driven by strong private consumption and public investment, even as growth projections have been lowered to 6.3 per cent in 2025,” Ingo Pitterle, Senior Economic Affairs Officer, Global Economic Monitoring Branch, Economic Analysis and Policy Division, UN Department of Economic and Social Affairs (DESA), said at a press briefing here.

The report said the global economy is at a precarious juncture, marked by heightened trade tensions and elevated policy uncertainty. The recent surge in tariffs—driving the effective US tariff rate up steeply—threatens to raise production costs, disrupt global supply chains and amplify financial turbulence.

The report said that despite a projected moderation, India remains one of the fastest-growing large economies, supported by resilient consumption and government spending.

India’s economy is forecast to grow by 6.3 per cent in 2025, down from 7.1 per cent in 2024.

“Resilient private consumption and strong public investment, alongside robust services exports, will support economic growth,” the report said.

“While looming United States tariffs weigh on merchandise exports, currently exempt sectors—such as pharmaceuticals, electronics, semiconductors, energy, and copper—could limit the economic impact, though these exemptions may not be permanent,” it added.

The 6.3 per cent growth projection for India in 2025 is slightly lower than the 6.6 per cent estimated in the UN World Economic Situation and Prospects 2025 published in January this year. GDP growth for India for 2026 is projected to be 6.4 per cent.

In India, unemployment remains largely stable amid steady economic conditions, though persistent gender disparities in employment underscore the need for greater inclusivity in workforce participation. The report added that in India, inflation is projected to slow from 4.9 per cent in 2024 to 4.3 per cent in 2025, staying within the central bank’s target range.

Declining inflation has allowed most of the South Asian region’s central banks to commence or continue monetary easing in 2025. The report noted that the Reserve Bank of India, which had kept its policy rate steady at 6.5 per cent since February 2023, began its easing cycle in February 2025. Meanwhile, governments in Bangladesh, Pakistan and Sri Lanka are expected to continue fiscal consolidation and economic reforms under IMF-supported programs.

The report said that global GDP growth is now forecast at just 2.4 per cent in 2025, down from 2.9 per cent in 2024 and 0.4 percentage points below the January 2025 projection.

“It’s been a nervous time for the global economy. In January this year, we were expecting two years of stable, if subpar, growth, and since then, prospects have diminished, accompanied by significant volatility across various dimensions,” Shantanu Mukherjee, director, Economic Analysis and Policy Division, UN DESA, said at the press briefing.

He said the global economic growth is forecast at 2.4 per cent for 2025 and 2.5 per cent for 2026.

“This is a downward revision of 0.4 percentage points each year, back from what we were expecting in January. Now this is not a recession, but the slowing down is affecting most countries and regions,” Mukherjee said.

Uncertainty over trade and economic policies, combined with a volatile geopolitical landscape, is prompting businesses to delay or scale back critical investment decisions.

These developments are compounding existing challenges, including high debt levels and sluggish productivity growth, further undermining global growth prospects, the report said.

The report further said that the slowdown is broad-based, affecting both developed and developing economies. Growth in the United States is projected to decelerate significantly, from 2.8 per cent in 2024 to 1.6 per cent in 2025, with higher tariffs and policy uncertainty expected to weigh on private investment and consumption.

China’s growth is expected to slow to 4.6 per cent this year, reflecting subdued consumer sentiment, disruptions in export-oriented manufacturing and ongoing property sector challenges.

Several other major developing economies, including Brazil, Mexico and South Africa, are also facing growth downgrades due to weakening trade, slowing investment and falling commodity prices.

"The tariff shock risks hitting vulnerable developing countries hard, slowing growth, slashing export revenues, and compounding debt challenges, especially as these economies are already struggling to make the investments needed for long-term, sustainable development," United Nations Under-Secretary-General for Economic and Social Affairs Li Junhua said.

For many developing countries, the bleak economic outlook undermines prospects for creating jobs, reducing poverty, and addressing inequality, it said. For least developed countries—where growth is expected to slow from 4.5 per cent in 2024 to 4.1 per cent in 2025—declining export revenues, tightening financial conditions, and reduced official development assistance flows threaten to further erode fiscal space and heighten the risk of debt distress.

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

Revitalising the rules-based trading system and providing targeted support to vulnerable countries will be critical to fostering sustainable and inclusive development, it said.