UN Cuts India’s 2025 GDP Forecast to 6.3%, Still One of the Fastest Growing Major Economies

India’s economic growth forecast for 2025 has been revised downward to 6.3% by the United Nations, a slight dip from the earlier estimate of 6.6% made in January 2025. Despite this revision, India continues to be regarded as one of the fastest-expanding major economies globally, fuelled by robust private consumption, government capital expenditure, and service exports.

This update was released in the United Nations’ mid-year edition of the World Economic Situation and Prospects report.

Read More: India’s GDP Growth Cut by Fitch to 6.20% for FY25; FY27 Pegged at 6.3%. 

Key Growth Drivers Remain Intact

According to Ingo Pitterle, Senior Economic Affairs Officer at the UN Department of Economic and Social Affairs (DESA), India’s economic momentum is being powered by a combination of steady household consumption, elevated public investment, and strong services exports. These factors have contributed to the country’s ability to maintain its position as a key growth engine among large economies, even in the face of a global slowdown.

The services sector, particularly in IT and digital exports, continues to be a critical growth pillar.

Impact of Global Trade Tensions

The report points to a challenging global environment characterised by elevated policy uncertainty and rising trade tensions. A notable concern is the recent increase in United States tariffs, which have sharply raised the effective US tariff rate. These could potentially disrupt global supply chains and escalate production costs, posing indirect risks to India’s export-driven segments.

Nonetheless, certain Indian sectors, such as pharmaceuticals, electronics, energy, semiconductors, and copper, are currently exempt from these tariffs. The report cautions, however, that these exemptions may be temporary.

Unemployment and Inflation Trends in India

India’s labour market continues to show signs of stability, with unemployment levels largely steady. However, the report draws attention to the persistent gender gap in workforce participation, indicating the need for more inclusive employment strategies to enhance long-term growth potential.

On the inflation front, the report estimates a moderation from 4.9 per cent in 2024 to 4.3 per cent in 2025. This places inflation well within the Reserve Bank of India’s target range, offering comfort on the monetary policy front.

Conclusion

The forecast for India’s GDP growth in 2026 has been pegged slightly higher at 6.4%. This modest upward revision suggests continued momentum in the medium term, assuming global headwinds do not intensify.

Despite a softer projection for 2025, India’s overall economic trajectory remains relatively resilient, underpinned by domestic demand strength and focused government investment.

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