India’s Economic Growth Outlook : UN Report

INDIA’S ECONOMIC GROWTH OUTLOOK: UN REPORT

Overview:

• According to the United Nations (UN) World Economic Situation and Prospects 2025 report, India’s economy is expected to grow by 6.6% in 2025 and 6.7% in 2026.
• The growth is supported by strong private consumption, investment growth, and government-driven infrastructure development.

KEY POINTS

• Growth Forecast for India:
  • The UN’s growth forecast for India in 2025 is 6.6%, slightly increasing to 6.7% in 2026.
  • The growth drivers include:
    • Strong private consumption.
    • Continued investment growth, particularly in infrastructure.
    • The public sector plays a key role in funding major projects, including those related to physical infrastructure, digital connectivity, and social infrastructure like water supply and sanitation.
• Economic Slowdown in 2024-25:
  • The First Advance Estimates by the National Statistics Office predict a slower growth of 6.4% for India in 2024-25, which is lower than the Reserve Bank of India’s (RBI) projection of 6.6%.
  • This slowdown marks the lowest growth rate in four years.
• Infrastructure and Investment:
  • Capital expenditure on infrastructure is expected to have positive multiplier effects on growth.
  • Investment in manufacturing and services sectors will continue to support economic activity, alongside a strong export performance in sectors like pharmaceuticals and electronics.
• Agricultural Outlook:
  • The favorable monsoon rains in 2024 have improved conditions for summer sowing of crops, boosting expectations for higher agricultural output in 2025.
• Regional Economic Outlook (South Asia):
  • South Asia’s economic growth in 2025 is projected at 5.7%, driven largely by India’s performance.
  • Growth in the region is expected to remain robust, with a slight increase to 6% in 2026.
• Risks to Economic Outlook:
  • The report highlights several risks to global and regional growth:
    • Geopolitical tensions may escalate.
    • Deceleration in external demand.
    • Ongoing debt challenges.
    • Social unrest in some regions.
  • Climate change risks: The region is highly vulnerable to extreme weather events, which could disrupt economic activity.
• Inflation Outlook:
  • Consumer price inflation in India is forecast to decrease from an estimated 8% in 2024 to 4.3% in 2025, staying within the 2-6% range set by the RBI.
• Global Economic Outlook:
  • Global growth is expected to remain at 8% in 2025, the same as in 2024.
• Opportunities for Resource-Rich Countries:
  • India, as a resource-rich country, can leverage rising demand for critical minerals to boost economic growth, create jobs, and increase public revenues for investments.
  • However, these opportunities come with significant risks, including environmental and social impacts.
  • The report urges governments to adopt forward-looking policies and comprehensive regulatory frameworks to ensure sustainable and equitable extraction of resources.

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