United Nations: The Indian economy is projected to expand by 6.6 percent in 2025, primarily supported by robust private consumption and investment, according to a United Nations report that said economic growth in South Asia is expected to remain robust this year mainly driven by the “strong performance” in India.
The UN World Economic Situation and Prospects 2025, released here Wednesday, said that the near-term outlook for South Asia is expected to remain robust, with growth projected at 5.7 percent in 2025 and 6.0 percent in 2026, “driven by strong performance in India as well as economic recovery in a few other economies”, including Bhutan, Nepal, and Sri Lanka.
The Indian economy grew by 6.8 percent in 2024 and is forecast to expand by 6.6 percent in 2025. The Indian economy is projected to return to a 6.8 percent growth in 2026.
The report highlighted that capital expenditure on infrastructure development is expected to have strong multiplier effects on growth in the coming years. Expansion in the manufacturing and services sectors will continue to drive the economy, while strong export growth in services and certain goods categories, such as pharmaceutical and electronics, will bolster economic activity, the UN report said.
It also noted that favourable monsoon rains in 2024 have improved summer-sowing areas for all major crops, boosting agricultural output expectations for 2025.
The UN report said that economic growth in South Asia is expected to remain robust in 2025, primarily driven by strong performance in India. The region is projected to grow at 5.7 percent in 2025 and 6 percent in 2026.
Risks to the outlook, the report stressed, include possible escalation of geopolitical tensions, deceleration in external demand, ongoing debt challenges, and social unrest. In addition, the region is highly vulnerable to the impact of climate hazards, with extreme weather events posing a significant risk, the report said.
“Countries cannot ignore these perils. In our interconnected economy, shocks on one side of the world push up prices on the other. Every country is affected and must be part of the solution — building on progress made,” said António Guterres, UN Secretary-General, in the foreword to the report.
Consumer price inflation, the report forecast, would decrease from an estimated 4.8 percent in 2024 to 4.3 percent in 2025, staying within the 2–6 percent medium-term target range set by the RBI.
The UN flagship economic report projects that global growth will remain at 2.8 percent in 2025, unchanged from 2024.
The report also highlighted the opportunity for resource-rich developing countries, such as India, to boost growth, create jobs, and increase public revenues for investment through rising demand for critical minerals. The report warns that these opportunities come with considerable risks.
“Governments must adopt forward-looking policies and comprehensive regulatory frameworks to drive sustainable extraction, equitable benefit-sharing, and investments in building productive capacities to maximize the development gains from these resources,” said Li Junhua, UN Under-Secretary-General for Economic and Social Affairs.
