Mumbai: The Indian economy is projected to expand by 6.6 per cent in 2025 and 6.8 per cent in 2026, primarily supported by robust private consumption and investment, export growth in services and certain manufactured goods according to a United Nations World Economic Situation and Prospects Report 2025 (WESP).
These projections are slightly higher than India’s National Statistics Office’s projection of 6.4 for 2024-25, the lowest in four years released on Tuesday.
Hamid Rashid, UN head of Global Economic Monitoring said, “India would again be the fastest growing large economy in the world.”
According to the report, the near-term outlook for South Asia is expected to remain robust, with regional growth projected at 5.7 per cent in 2025 and 6 per cent in 2026, driven by strong performance in India as well as economic recovery in Bhutan, Nepal, Pakistan, and Sri Lanka. Risks to India include geopolitical tensions, slowing external
demand, and vulnerability to climate hazards.
demand, and vulnerability to climate hazards.
On the supply side, expansion in the manufacturing and services sectors will keep driving the economy throughout the forecast period. Meanwhile, favourable monsoon rains in 2024 have improved the summer-sowing areas for all major crops, boosting agricultural output expectations for 2025.
The report forecast India's consumer price inflation to come down from an estimated 4.8 per cent last year to 4.3 per cent this year, staying within the 2 to 6 per cent medium-term target range set by the Reserve Bank of India. It said the urban unemployment rate for India in the second quarter of last year was 6.6 per cent “virtually unchanged from the rate of 6.7 per cent recorded in 2023”. “Although there has been progress in female labour market participation in the country, substantial gender gaps remain,” it added.
Global economic growth is forecast to remain steady at 2.8 per cent in 2025, with modest improvement to 2.9 per cent in 2026. However, China’s growth is expected to moderate to 4.8 per cent in 2025 due to a shrinking population and rising trade tensions, threatening its medium-term prospects.
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