Image Source: Free Press Journal
India's growth estimate for 2025 has been reduced by the United Nations to 6.3% in a moderation from earlier projections. The country still beats most other big economies, however, and remains the world's fastest-growing major economy despite this downward revision. The reduced forecast comes as the world experiences increased trade tensions and policy uncertainty, but the nation's strong domestic demand and state investment are still the source of resilience.
On 16 May 2025, the United Nations released its mid-year edition of the World Economic Situation and Prospects (WESP) report, revising India's GDP growth forecast for 2025 to 6.3%. Although this is a revision lower than previous estimates, India's economic performance continues to be robust compared to global counterparts, supported by resilient private consumption and government spending.
Revised Growth Forecast
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The UN now estimates India's GDP to increase by 6.3% in 2025, from 7.1% in 2024, and lower than the 6.6% estimate in January 2025.
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The downward revision captures higher global economic fragility, such as trade tensions and policy uncertainty.
India's Economic Resilience
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Even with the moderation, India is still the fastest-growing large economy in the world, ahead of key economies like China, the US, and the EU.
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The growth of the country is fueled by solid private consumption, strong investment by the public sector, and resilient services exports.
Global Economic Context
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The UN report indicates a "delicate moment" for the global economy, pointing to increased trade tensions, specifically a surge in US tariffs, which threaten to increase the cost of production and interrupt supply chains.
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International growth is set to ease, with India's growth contrasting sharply with the muted performance of other large economies.
Sectoral and Policy Drivers
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Indian private consumption continues to be robust, especially in rural pockets, and government capital spending keeps economic activity going.
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Exports of services contribute substantially to growth, balancing out slower merchandise exports weighed down by international trade tensions.
Relative Global Perspective
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India's 6.3% growth in 2025 easily outshines the world average, at which the US is pegged at 1.6%, China at 4.6%, and the Eurozone at 1% or less.
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The IMF's recent World Economic Outlook also reaffirms India's leadership, with similar estimates for 2025 and 2026.
Trends in Inflation and Employment
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Indian inflation is seen moderating, with estimates dropping from 4.9% in 2024 to 4.3% in 2025, well within the central bank's target corridor.
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Unemployment is steady, although the UN reports continued gender imbalances in employment.
Future Outlook
The UN forecasts India's growth to moderately increase to 6.4% in 2026, though still lower than previous estimates.
Policy momentum and Indian economic fundamentals make it a leading source of world growth even as the global environment continues to be difficult.
Relevant Sources: The Hindu Business Line, News18, NDTV, Economic Times, Republic World, Indian Express, Rediff, Free Press Journal, The Week
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