India to grow by 6.5% in 2025, maintain status as fastest-growing major economy: UN report

United Nations: India is expected to grow by 6.5 per cent in 2025 on the back of continued robust public spending and ongoing monetary easing, even as the world economy is on a recessionary trajectory, driven by escalating trade tensions and persistent uncertainty, a UN report said.

The UN Trade and Development (UNCTAD) in its new report, 'Trade and Development Foresights 2025 - Under pressure: Uncertainty reshapes global economic prospects', said that global growth is projected to slow to 2.3 per cent in 2025, placing the world economy on a recessionary path.

The report released on Wednesday cites mounting threats, including trade policy shocks, financial volatility and a surge in uncertainty that risk derailing the global outlook.

India is projected to grow by 6.5 per cent in 2025, slightly lower than the 6.9 per cent growth of 2024 but still maintaining its status as the fastest-growing major economy, the report said.

UNCTAD "estimates that India will grow by 6.5 per cent in 2025 on the back of continued robust public spending and ongoing monetary easing. The decision of the central bank to cut the interest rate by 25 basis points for the first time in five years in early February will support household consumption as well as provide a boost to private investment plans," it said.

UNCTAD projects that the South Asia region will expand by 5.6 per cent in 2025, as declining inflation opens the way for monetary loosening across most of the region.

"Nevertheless, food price volatility will remain a risk and complex debt dynamics will continue to burden economies such as Bangladesh, Pakistan and Sri Lanka," it added.

The report said that the world economy is on a recessionary trajectory, driven by escalating trade tensions and persistent uncertainty. Rising trade tensions are impacting global trade, with UNCTAD noting that recent tariff measures are disrupting supply chains and undermining predictability.

"Trade policy uncertainty is at a historical high", the report notes, "and this is already translating into delayed investment decisions and reduced hiring".

The slowdown will affect all nations, but UNCTAD remains concerned about developing countries and especially the most vulnerable economies.

Many low-income countries face a "perfect storm" of worsening external financial conditions, unsustainable debt and weakening domestic growth. UNCTAD underlines the real threat to economic growth, investment, and development progress, particularly for the most vulnerable economies.

The UN agency pointed to the growth of trade among developing countries (South-South trade) as a source of resilience. Already accounting for about one-third of global trade, “the potential of South-South economic integration offers opportunities for many developing countries”, the report noted.

UNCTAD urges dialogue and negotiation, alongside stronger regional and global policy coordination, building on existing trade and economic ties.

"Coordinated action will be essential to restore confidence and keep development on track," the report said.