India to lead global growth in 2025 despite slowdown: UNCTAD report
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Despite a global economy teetering on the edge of recession, India is projected to grow by 6.5% in 2025, continuing its streak as the fastest-growing major economy, according to the United Nations Conference on Trade and Development (UNCTAD).
The latest UNCTAD report, Trade and Development Foresights 2025 – Under Pressure: Uncertainty Reshapes Global Economic Prospects, forecasts a stark global slowdown, with overall world economic growth expected to dip to 2.3% next year. This deceleration is largely attributed to increasing trade tensions, financial instability, and prolonged economic uncertainty.
Against this backdrop, India's economy remains a bright spot. Although the 2025 projection is slightly below the 6.9% estimated for 2024, the country's growth remains driven by strong public sector investment and a shift towards looser monetary policies.
In a significant policy move, the Reserve Bank of India recently lowered interest rates for the first time in five years, cutting rates by 25 basis points. This monetary easing is expected to boost consumer spending and encourage private investment.
The report also notes that South Asia as a region is forecast to grow by 5.6% in 2025, aided by declining inflation that opens the door for more flexible monetary policies. However, UNCTAD cautions that risks remain - particularly in countries like Pakistan, Sri Lanka, and Bangladesh, which continue to face economic strain due to complex debt burdens and food price fluctuations.
UNCTAD warns that globally, growing protectionism and unpredictable trade policies are hurting investor confidence. The current environment of uncertainty is causing businesses to delay investments and slow hiring, which in turn hampers growth.
Developing and low-income nations are especially vulnerable, facing what UNCTAD calls a “perfect storm” of external financial pressures, unsustainable debt, and stagnant domestic economies. These conditions threaten to derail development progress in the most fragile regions of the world.
Still, the report highlights the growth of South-South trade - commerce between developing countries - as a potential buffer. Now accounting for nearly a third of global trade, increased economic cooperation among developing nations offers a path toward greater resilience.
