The Indian economy is projected to grow by 6.6 percent in 2025, mainly supported by strong private consumption and investment. Also, economic growth in South Asia is expected to be strong this year, mainly driven by India’s “strong performance”.
This was said in the ‘United Nations World Economic Situation and Prospects 2025’ report which was released here on Wednesday.
It said the near-term outlook for South Asia is expected to remain strong, with growth forecast at 5.7 per cent in 2025 and 6.0 per cent in 2026. This is driven by the strong performance in India as well as economic recovery in some other economies including Bhutan, Nepal and Sri Lanka.
The Indian economy is projected to grow at 6.8 percent in 2024 and 6.6 percent in 2025. The Indian economy is projected to return to 6.8 percent growth in 2026.
“The Indian economy, the largest in the South Asia region, is projected to grow by 6.6 percent in 2025, mainly supported by strong private consumption and investment,” the report said. Moreover, capital expenditure on infrastructure development is expected to have a strong multiplier effect on growth in the coming years.”
Along with this, favorable monsoon rains in 2024 will improve summer sowing of all major crops which is likely to increase agricultural production in 2025.
The report said investment growth in East Asia and South Asia has been particularly strong. This is partly driven by domestic and foreign investment in new supply chains, particularly in India, Indonesia and Vietnam….
The public sector in India is playing an important role in financing large-scale infrastructure projects, physical and digital connectivity and social infrastructure including improvements in sanitation and water supply. Strong investment growth is expected to continue in 2025.
Consumer price inflation in India is projected to decline from an estimated 4.8 percent in 2024 to 4.3 percent in 2025, which will remain within the medium term target range of two to six percent set by the central bank.
Citing Reserve Bank of India (RBI) data, the report said employment indicators in India remained strong through 2024, keeping labor force participation close to record levels.
Urban unemployment during this period stood at 6.6 percent – almost unchanged from the 6.7 percent rate recorded in 2023. At the same time, there has been progress in female workforce participation in the country, yet gender inequality persists.
It said climate-related shocks could severely impact South Asia in 2024. The first half of the year saw heat waves, drought and erratic rainfall in many countries in the region, including Bangladesh, India, Pakistan and Sri Lanka, which reduced crop yields and increased food prices. Additionally, weather-related events disproportionately affect poor rural households, leading to reduced incomes and increased income inequality.
