India’s economy is projected to grow by 6.6% in 2025, following an estimated expansion of 6.9% in 2024, according to the UN World Economic Situation and Prospects (WESP) 2025 report. The growth will be primarily driven by private consumption, investment, and robust export performance in services and select manufactured goods.
However, India’s domestic challenges persist. The National Statistics Office (NSO) estimates a 6.4% GDP growth for the financial year 2024-25, marking a four-year low. This is down from 8.2% in 2023-24, reflecting slowdowns in key sectors. The manufacturing sector’s growth is expected to fall sharply from 9.9% in FY24 to 5.3% in FY25, while mining and quarrying could drop from 7.1% to 2.9%.
Sectoral Highlights and Investment Worries
While some sectors show resilience, others indicate concern:
– Agriculture is set to recover with 3.8% growth, up from 1.4% last year.
– Public Administration, Defence, and Other Services are expected to grow by 9.1%, an improvement from 7.8% in FY24.
One worrying trend is the slowdown in gross fixed capital formation, an indicator of fresh investments. Its growth is projected at 6.4%, down from 9% in 2023-24, raising concerns about long-term economic momentum.
Global and Regional Context
Globally, growth is projected to remain steady at 2.8% in 2025, unchanged from 2024, according to the UN report. This remains below the pre-pandemic average of 3.2%, as weak investment, sluggish productivity, and high debt levels weigh on recovery.
The report says U.S. growth is expected to slow from 2.8% last year to 1.9% in 2025 as the job market weakens and consumer spending slows down.
Europe is predicted to grow modestly, with an increase from 0.9% in 2024 to 1.3% in 2025, helped by lower inflation and strong job markets.
South Asia is expected to stay the world’s fastest-growing region, with GDP growth projected at 5.7% in 2025 and 6% in 2026, driven by India’s strong performance and recoveries in Bhutan, Nepal, Pakistan, and Sri Lanka.
East and South Asia face significant challenges, including geopolitical tensions, trade disputes, and climate change impacts. China’s economy, for instance, is forecasted to grow at 4.8% in 2025, slightly down from 4.9% in 2024, as household consumption remains weak, and the property sector continues to struggle.
The report notes that lower inflation and monetary easing in many economies could provide a modest boost to global activity in 2025. However, risks such as geopolitical conflicts and elevated borrowing costs remain, especially for low-income countries, where fragile growth threatens progress on sustainable development goals.
Call for Action
In the report’s foreword, UN Secretary-General Antonio Guterres urged countries to act decisively. “In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution. Let’s make 2025 the year we put the world on track for a prosperous, sustainable future for all.”
With tailored policies, including strategic public spending and fiscal reforms, countries in East and South Asia aim to balance economic stability and growth. Central banks have eased inflationary pressures by lowering interest rates, but challenges like volatile food prices and high debt levels require continued vigilance.
The report indicates that major central banks are expected to lower interest rates further in 2025 as inflationary pressures subside. Global inflation is forecasted to decrease from 4% in 2024 to 3.4% in 2025, providing relief to households and businesses. It also emphasizes the need for decisive multilateral efforts to address interconnected crises, such as debt, inequality, and climate change.
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