India Set for 6.5% Growth in 2025, Retains Top Spot Among Major Economies: UN Report

India is projected to remain the world’s fastest-growing major economy in 2025 with a growth rate of 6.5%, even as the global economy faces mounting recessionary pressures, according to the latest report released by the United Nations Conference on Trade and Development (UNCTAD) on Wednesday.

Domestic Momentum Continues 

UNCTAD attributes India’s steady performance to continued robust public spending and ongoing monetary easing.

The report highlights that the Reserve Bank of India’s decision to cut interest rates by 25 basis points in February 2025—its first rate cut in five years—will support household consumption and encourage private investment activity, providing a further boost to the economy.

While slightly lower than the 6.9% growth recorded in 2024, India’s 2025 forecast reinforces its position as the fastest-growing major economy globally.

Regional Outlook: South Asia to Grow at 5.6%

The report forecasts a 5.6% growth rate for the South Asian region in 2025, supported by easing inflation, which allows for monetary policy loosening across several countries in the region.

However, the report also flags persistent risks, including food price volatility and complex debt dynamics affecting nations such as Bangladesh, Pakistan, and Sri Lanka.

Global Economy Faces Recessionary Headwinds

The global economic outlook, in contrast, remains bleak. UNCTAD warns that the world economy is heading towards a recessionary path, driven by escalating trade tensions, policy shocks, and persistent uncertainty.

The report notes that trade policy uncertainty is at a historical high, leading to delayed investments and reduced hiring worldwide.

Rising tariffs and protectionist measures are disrupting supply chains and eroding predictability, significantly impacting global trade flows.

Developing Countries Under Pressure

Developing and low-income countries face what UNCTAD describes as a “perfect storm” of challenges: worsening external financial conditions, unsustainable debt levels, and weakening domestic growth.

These pressures pose a real threat to economic stability, investment flows, and long-term development goals, especially for the most vulnerable economies.

Hope in South-South Trade and Cooperation

Despite these global headwinds, UNCTAD highlights the growth of South-South trade—trade among developing nations—as a key source of economic resilience.

Already accounting for about one-third of global trade, this form of economic integration presents significant opportunities for sustainable development across the Global South.

The report concludes by emphasising the need for stronger regional and global policy coordination, urging countries to strengthen existing economic ties and commit to dialogue and cooperative policymaking. “Coordinated action will be essential to restore confidence and keep development on track,” it stated.

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