India retained the title of the world’s fastest growing economy with an estimated growth of 6.6%: UN

“India will once again be the world’s fastest growing economy” with an annual growth rate of 6.6 percent, according to Hamid Rashid, head of the UN’s Global Economic Monitoring.

He was speaking at the launch of the UN’s leading report, the World Economic Situation and Prospects 2025, (WESP) on Thursday, which revealed that the gross domestic product (GDP) will grow rapidly by 6.8 percent next year.

WESP said India’s economy will be bolstered by “strong export growth in services and certain goods categories, particularly pharmaceuticals and electronics”.

“Strong private consumption and investment” will boost the country’s economy and “larger spending on infrastructure development is expected to have a strong impact on growth next year,” the report said.

“On the supply side, expansion in the manufacturing and services sectors will continue to drive the economy over the forecast period,” it added.

There was good news on the agricultural side as well: “Good monsoon rains in 2024 improved summer planting areas for all major crops, raising agricultural expectations for 2025,” WESP said.

India’s growth figures for this year have slowed slightly from 6.8 percent last year, but should reflect the country’s steady growth as the country maintains its position as the fastest growing economy.

The average global economic growth was held at 2.8 percent, while the growth of advanced economies decreased by 0.1 percent to 1.6 percent compared to the previous year.

This year’s figure for China, the second fastest growing economy, fell by 0.1 percent to 4.8 percent and is expected to fall by 0.3 percent next year compared to this year to 4.5 percent.
The US economy has slowed significantly and is expected to grow 1.9 percent this year, down 0.9 percent from the 2.8 percent recorded last year.

The UN’s projection of India’s growth rate of 6.6 percent this year is slightly higher than India’s National Statistics Office’s projection of 6.4 percent in 2024-25 released on Tuesday.

Regarding the region, Rashid said, “South Asia’s economic outlook is mixed” reflecting the diversity among countries in the region with some performing well.

WESP said regional growth is expected to be 5.7 percent in 2025 and 6 percent in 2026, “driven by strong performance in India and economic recovery in several other economies”.

“Pakistan and Sri Lanka are expected to experience moderate growth in economic activity, with GDP expected to increase by 3.4 and 4 percent respectively, as both economies continue to recover from the recession in 2022-2023,” WESP said.

It has set a condition that the two countries resolve their debt problems.

“GDP in Bhutan and Nepal is expected to grow by more than 5 percent in 2025, but Bangladesh’s economy is expected to slow following unrest in mid-2024 and political uncertainty,” it said, giving a growth projection of 4.2 percent.

WESP warned that in the region, “risks on the outlook are skewed due to increased regional conflicts, declining external demand, ongoing debt challenges, and civil unrest”.

“The region is highly vulnerable to the impact of climate hazards, with extreme weather conditions posing the greatest risk,” it added.

The report predicts that consumer price inflation in India will slow slightly from an estimated 4.8 percent last year to 4.3 percent this year, “remaining within the 2 to 6 percent medium-term target range set” by the Reserve Bank of India.

He blamed the “unfavorable weather” for the increase in the prices of vegetables, grains, and other essentials last year which caused the “increase in inflation figures in the country in June and September”.
On the employment side of India’s population, “indicators have remained strong throughout 2024, with labor force participation near a record high,” WESP said.

It said the urban unemployment rate in the second half of last year was 6.6 percent “almost unchanged from the 6.7 percent recorded in 2023”.

“Although there has been progress in women’s participation in the labor market in the country, there are still gender gaps,” it added.