Despite global economic uncertainty, India continues to outperform other major economies, with the United Nations projecting a 6.3% growth rate for the country in the current financial year—making it the fastest-growing major economy in the world.
This update comes from the UN’s mid-year revision of the World Economic Situation and Prospects (WESP) report, which attributes India’s resilience to:
-
Strong household spending
-
Robust government capital investment
-
Booming services exports
Although the growth projection has been slightly revised down from the 6.6% forecast in January, India still maintains a comfortable lead over global peers:
-
China: 4.6%
-
US: 1.6%
-
Japan: 0.7%
-
EU: 1%
-
Germany: -0.1% (negative growth)
For FY 2025, India's economy is forecasted to grow slightly faster at 6.4%, still remaining the top performer among large economies.
Inflation & Employment
The report brings positive news on inflation, projecting a decline from 4.9% in 2024 to 4.3% in 2025, keeping it within the Reserve Bank of India’s target range.
Employment numbers are holding steady, but the report stresses the need for greater female workforce participation, highlighting the persistent gender gap in employment.
Risks Ahead
The UN warned of external headwinds, especially:
-
Possible new US tariffs, which could impact Indian exports.
-
Current exemptions on pharmaceuticals, electronics, energy, and copper may soften the blow, but their long-term continuity remains uncertain.
Global Economic Context
The broader global outlook is far less optimistic:
-
The UN describes the world economy as being at a "precarious moment" due to trade tensions, geopolitical risks, and policy uncertainty.
-
Many countries are facing slower-than-expected growth or even economic contraction.
IMF's Similar Outlook
Last month, the International Monetary Fund (IMF) offered a comparable forecast, expecting India to grow by 6.2% in 2024 and 6.3% in 2025, reinforcing global confidence in India's economic trajectory.
In summary, India remains a rare bright spot in an otherwise gloomy global economic landscape, driven by domestic demand, public investment, and resilience in services—but it will need to navigate global trade risks and domestic structural challenges to sustain its momentum.
