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India is once again set to be the fastest growing large economy globally, with an estimated growth rate of 6.6% for 2025, according to the United Nations’ "World Economic Situation and Prospects 2025" (WESP) report released on Thursday. The country's Gross Domestic Product (GDP) is projected to accelerate slightly to 6.8% in the coming year.
The report highlights key factors that will drive India's growth, including strong export performance, particularly in pharmaceuticals and electronics, alongside robust private consumption and investment. The government's capital expenditure on infrastructure development is expected to generate significant multiplier effects, further fueling growth. The manufacturing and services sectors will continue to expand, providing consistent momentum to the economy.
On the agriculture front, favorable monsoon rains in 2024 have boosted the prospects for summer-sown crops, which is expected to enhance agricultural output for 2025.
While India’s growth projection for this year is slightly lower than last year's 6.8%, it remains the world’s fastest-growing major economy, especially considering the sluggish global growth rate. The global economy is forecasted to grow at 2.8%, with developed economies seeing a marginal decline in growth to 1.6%.
India's projected 6.6% growth rate for 2025 is slightly above the National Statistics Office’s projection of 6.4% for the same period. For the South Asia region, the outlook remains mixed, with the region's overall growth projected at 5.7% in 2025, bolstered by India’s performance. However, Pakistan and Sri Lanka are expected to see modest growth of 3.4% and 4%, respectively, as they recover from economic downturns. Bhutan and Nepal are projected to see growth exceeding 5%, while Bangladesh faces a slowdown due to political unrest, with growth projected at 4.2%.
WESP further noted that risks to the region’s outlook are tilted to the downside, citing geopolitical tensions, external demand deceleration, ongoing debt challenges, and the vulnerability to climate change impacts.
In terms of inflation, India's consumer price inflation is expected to decrease slightly to 4.3% in 2025, staying within the Reserve Bank of India’s target range of 2 to 6%. The report attributes last year’s inflation spikes in vegetables, cereals, and other staples to adverse weather conditions.
On employment, the WESP report noted strong indicators for India, with labor force participation remaining high in 2024. However, substantial gender gaps in the labor market persist, despite progress in female participation.