UN Lowers India’s 2025 GDP Growth Forecast to 6.3%, Cites Global Headwinds

The United Nations has revised India’s GDP growth forecast for 2025 downward to 6.3%, a decline from 7.1% in 2024, according to the mid-year update of the World Economic Situation and Prospects report. Despite this moderation, India continues to be among the fastest-growing large economies, buoyed by strong private consumption, robust public investment, and resilient services exports. The report also highlights global economic challenges like trade tensions and tariff hikes.

Why in News?

The UN released its mid-2025 update to the World Economic Situation and Prospects report. It revised India’s 2025 GDP growth to 6.3%, down from 6.6% (January estimate) and 7.1% (2024 actual). Despite the cut, India remains a global growth leader, with stable inflation and resilient economic indicators.

Key Highlights

• India’s GDP Forecast for 2025: 6.3% (down from 7.1% in 2024).
• Global GDP Forecast: 2.4% for 2025 (down from 2.9% in 2024).
• India’s inflation projection: Easing from 4.9% (2024) to 4.3% (2025).
• RBI policy rate: Steady at 6.5% since February 2023; started easing cycle in February 2025.
• GDP projection for India in 2026: 6.4%.

Reasons for India’s Resilience

• Strong private consumption and public investment.
• Robust services exports in sectors like IT, finance, etc.
• Exemptions from some US tariffs for key sectors like pharmaceuticals, electronics, and semiconductors.
• Monetary policy easing by the RBI due to declining inflation.

Global Economic Outlook

• Slowing growth across major economies like the US (1.6%), China (4.6%), and Brazil.
• Rising tariffs and policy uncertainties hurting investments and trade.
• Developing economies face export revenue decline, reduced development aid, and debt distress.

Risks Identified

• Tariff shocks affecting merchandise exports.
• Geopolitical tensions and volatile markets.
• Gender disparity in India’s employment remains a concern.
• Urgent need for multilateral cooperation to strengthen the global economy.