UN Reports a Downward Revision of India’s 2025 GDP Growth to 6.3%, Still Among the Fastest-Growing Major Economies

On Thursday, the United Nations released a report titled ‘The World Economic Situation and Prospects as of mid-2025’. This document warns that the global economy currently finds itself in a delicate position, characterized by increased trade tensions and significant policy uncertainties. The UN has adjusted its prediction for India’s economic growth in 2025 downward to 6.3 percent; however, the nation continues to rank among the fastest-growing large economies, driven by robust consumption and government expenditure.

“India remains one of the fastest-growing major economies, propelled by strong private consumption and public investment, even as the growth outlook is adjusted to 6.3 percent for 2025,” stated Ingo Pitterle, Senior Economic Affairs Officer in the Global Economic Monitoring Branch at the UN Department of Economic and Social Affairs (DESA), during a recent press briefing. The report also highlighted that the global economy is at a fragile crossroads, intensified by rising trade tensions and increased policy ambiguity.

Moreover, the report noted a recent surge in tariffs, significantly raising the effective US tariff rate, which poses a threat to production costs, disrupts global supply chains, and heightens financial instability. Despite a forecasted moderation, India’s economic growth is supported by steadfast consumption and government outlay. Specifically, India’s GDP is expected to expand by 6.3 percent in 2025, a decline from the 7.1 percent expected for 2024.

“Strong private consumption, substantial public investment, and healthy services exports will underpin economic growth,” the report added. It also pointed out that while potential US tariffs could adversely impact merchandise exports, currently exempt sectors like pharmaceuticals, electronics, semiconductors, energy, and copper might mitigate some negative consequences; however, these exemptions are not likely to last indefinitely.

The revised growth forecast of 6.3 percent for India in 2025 is slightly below the 6.6 percent predicted in the UN World Economic Situation and Prospects 2025 report released in January of this year. Projections for India’s GDP growth in 2026 stand at 6.4 percent. Despite the economic landscape, unemployment in India remains relatively stable; yet, ongoing gender disparities in employment underscore the necessity for enhanced inclusivity in labor market participation.

The report further indicated that India’s inflation rate is anticipated to decrease from 4.9 percent in 2024 to 4.3 percent in 2025, remaining within the target range set by the central bank. A drop in inflation has enabled several central banks in the South Asian region to initiate or persist with monetary easing in 2025. The Reserve Bank of India, which maintained its policy rate at 6.5 percent since February 2023, is expected to begin its easing cycle in February 2025. Concurrently, governments in Bangladesh, Pakistan, and Sri Lanka are likely to continue pursuing fiscal consolidation and economic reforms under the guidance of IMF-supported programs.

Global GDP growth is now projected at a modest 2.4 percent for 2025, a decrease from 2.9 percent in 2024 and 0.4 percentage points lower than the forecasts made in January 2025. “The global economy is navigating a nervy period. In January, we anticipated two years of stable, albeit subpar growth, but since then, prospects have deteriorated amid significant volatility across various dimensions,” remarked Shantanu Mukherjee, director of Economic Analysis and Policy Division at UN DESA during the press briefing.

He added that global economic growth is now estimated at 2.4% for 2025 and 2.5% for 2026, revised down by 0.4 percentage points each year from earlier projections. “This does not indicate a recession, but the slowdown is impacting nearly all countries and regions,” Mukherjee explained. The uncertainty surrounding trade and economic policies, coupled with a volatile geopolitical landscape, is causing businesses to postpone or reduce crucial investment decisions.

These evolving dynamics exacerbate existing challenges such as high debt levels and sluggish productivity growth, further hindering global growth prospects. According to the report, the slowdown is widespread, affecting both developed and developing countries. In the United States, growth is set to decelerate from 2.8 percent in 2024 to 1.6 percent in 2025, with rising tariffs and policy unpredictability anticipated to hinder private investment and consumer spending.

China is forecasted to experience a slowdown in growth to 4.6 percent this year, influenced by weak consumer sentiment, disruptions in export-oriented manufacturing, and ongoing challenges in the property sector. Several other prominent developing nations, including Brazil, Mexico, and South Africa, are also facing downward adjustments in growth due to diminished trade, reduced investment, and declining commodity prices.

“The tariff shock threatens to severely impact vulnerable developing nations, leading to slower growth, reduced export revenues, and worsening debt issues, especially as these economies already struggle to secure necessary investments for sustainable long-term development,” stated Li Junhua, United Nations Under-Secretary-General for Economic and Social Affairs. The grim economic outlook for many developing countries jeopardizes opportunities for job creation, poverty alleviation, and tackling inequality.

For least developed nations, where growth is expected to slow from 4.5 percent in 2024 to 4.1 percent in 2025, decreasing export revenues, tightening financial conditions, and diminishing official development assistance pose significant risks, further eroding fiscal capacity and increasing vulnerability to debt distress. Heightened trade tensions are also putting pressure on the multilateral trading system, marginalizing small and vulnerable economies within a increasingly fragmented global environment. The report emphasizes that enhancing multilateral collaboration is crucial to addressing these pressing challenges. Revitalizing a rules-based trading system and offering targeted support to at-risk nations are vital to promoting sustainable and inclusive development.