UN cuts India’s 2025 GDP growth forecast to 6.3%, sees strong momentum

In its latest economic report, the United Nations has revised India’s GDP growth forecast for 2025 down to 6.3%, from its earlier estimate of 6.6%. Despite the downward revision, the UN emphasized that India continues to show strong economic momentum driven by domestic demand and structural reforms.

The “World Economic Situation and Prospects” mid-year update pointed out that global uncertainties, including geopolitical tensions and inflationary pressures, have slightly dampened India’s growth prospects. However, India remains among the fastest-growing major economies.

According to the UN report, key drivers of India’s economic resilience include robust investment activity, digital transformation, and a strong services sector. The agricultural sector is also expected to see moderate growth, provided monsoon conditions remain stable.

The report noted that inflation in India is projected to average around 4.5% in 2025, within the Reserve Bank of India’s tolerance range. This could provide the central bank with room to maintain a balanced monetary policy stance.

Private consumption, which forms a significant portion of India’s GDP, has shown signs of steady recovery. Retail sales, consumer sentiment, and manufacturing output have all reported consistent improvements over the past two quarters.

However, the UN cautioned that challenges such as global economic fragmentation, financial market volatility, and potential supply chain disruptions remain risk factors. The report urged continued fiscal discipline and targeted social spending to support inclusive growth.

Experts believe that even with the revised forecast, India’s 6.3% growth rate remains healthy, especially in comparison to other G20 economies facing stagnation or recession.

The UN’s outlook is broadly aligned with other global institutions, including the IMF and World Bank, which have also recently adjusted India’s 2025 projections slightly downward while maintaining a positive long-term trajectory.

As India continues to implement reforms in taxation, infrastructure, and manufacturing, economists suggest that long-term growth could surpass estimates, provided global headwinds ease.

India’s Finance Ministry responded to the UN report by reaffirming its confidence in the economy’s fundamentals and highlighted ongoing initiatives to strengthen job creation and innovation.

With the global economic landscape in flux, India’s ability to sustain momentum while navigating external shocks will be key to its continued rise as an economic powerhouse.