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PHOTO: UN.org
United Nations – While the world economy is at a critical juncture with downward
growth trends, India is reported to be the fastest-growing large economy, expecting
to record a 6.3 per cent growth in 2025 by the World Economic Situation and
Prospects (WESP) report published May 15, 2025 by the United Nations
Department of Economic and Social Affairs.
In April 2025, the International Monetary Fund had projected India’s economy to
grow by 6.2 per cent this year and 6.3 per cent next year.
This trend in the growth of the world’s fifth-largest economy, India, contrasts
sharply with the global growth rate of 2.4 per cent this year, along with growth
rates of other major economies, according to the WESP.
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The WESP also projects positive trends for India in inflation and employment.
“Inflation is projected to slow from 4.9 per cent in 2024 to 4.3 per cent in 2025,
staying within the central bank’s target range,” it says.
“Resilient private consumption and strong public investment, alongside robust
services exports, will support economic growth” for India, the report says.
This picture of India emerges against the backdrop of WESP forecasts of a general
widespread deterioration in growth prospects affecting both developed and
developing economies. The global economic growth is projected to slow to 2.4 per
cent in 2025, from 2.9 per cent in 2024.
“It’s been a nervous time for the global economy,” Shantanu Mukherjee, the
director of the Economic Analysis and Policy Division, said at the release of the
WESP. “In January this year, we were expecting two years of stable, if subpar
growth, and since then, prospects have diminished,” he added.
Heightened trade tensions, along with policy uncertainty, have significantly
weakened the global economic outlook for 2025, the WESP states.
The projection for China is 4.6 per cent, for the US 1.6 per cent, Germany
(negative) -0.1 per cent, Japan 0.7 per cent, and the European Union 1 per cent.
The WESP points out that higher tariffs, resulting in a significant increase in the
effective tariff rate in the United States of America, are likely to strain global
supply chains, drive up production costs and delay critical investment decisions,
while also contributing to financial market volatility.
“While looming US tariffs weigh on merchandise exports, currently exempt
sectors- such as pharmaceuticals, electronics, semiconductors, energy, and copper,
could limit the economic impact, though these exemptions may not be permanent,”
the report says.
“The tariff shock risks hitting vulnerable developing countries hard, slowing
growth, slashing export revenues, and compounding debt challenges, especially as
these economies are already struggling to make the investments needed for long-
term, sustainable development,” said Li Junhua, United Nations Under-Secretary-
General for Economic and Social Affairs.
The WESP report cautions that this glum economic outlook will further undermine
progress toward the Sustainable Development Goals resulting from slower global
growth, elevated inflationary pressures and weakening global trade—including a
projected halving of trade growth from 3.3 per cent in 2024 to 1.6 per cent in 2025.
International trade growth is projected to slow from 3.3 per cent in 2024 to 1.6 per
cent in 2025, while merchandise trade is projected to fall in the second half of
2025. This in turn may dampen demand for transport, tourism and other services,
according to the report.
In 2025, more than 20 developing countries have seen inflation growing to double
digit rates. Food inflation, averages above 6 per cent in Africa, South Asia and
Western Asia.
“Unemployment remains largely stable amid steady economic conditions,” the
report says. It further says that persistent gender disparities in employment
underscore the need for greater inclusivity in workforce participation.
Similar trends are predicted in global investment growth in 2025 due to trade
policy uncertainty, elevated interest rates and fiscal constraints. This, along with
sluggish investments, will impact growth prospects. Artificial Intelligence may
further disrupt the labor market, the report says.
The report emphasizes the need for a well-coordinated strategic monetary policy
with fiscal measures, supply-side reforms, and medium-term industrial policies to
balance inflation control, financial stability, and inclusive economic growth.
The UN expects the Fourth International Conference on Financing for
Development, to be held in Sevilla, Spain, from 30 June to 3 July 2025, to be a
crucial platform to address issues of strengthening multilateral cooperation, debt
sustainability and more to drive concrete actions on financing for sustainable
development for all.
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