India Maintains Position as the Fastest-Growing Major Economy with 6.6% Growth Forecast: UN

United Nations, Jan 10 (NationPress) "India is poised to reclaim its status as the world's fastest-growing large economy" with a projected annual growth rate of 6.6%, according to Hamid Rashid, the UN head of Global Economic Monitoring.

He made these remarks during the unveiling of the UN's flagship report, World Economic Situation and Prospects 2025 (WESP), on Thursday, which anticipates the gross domestic product (GDP) to expand even more at 6.8% next year.

The WESP report indicated that India's economy will be supported by "strong export growth in services and specific goods categories, notably pharmaceuticals and electronics".

"Robust private consumption and investment" are expected to further invigorate the country's economy, and "capital expenditure on infrastructure development is projected to yield significant multiplier effects on growth in the upcoming year," the report noted.

On the supply side, the report added, "expansion in the manufacturing and services sectors will continue to drive the economy throughout the forecast period."

There was positive news regarding agriculture as well: "Favourable monsoon rains in 2024 have enhanced summer-sowing areas for all major crops, boosting agricultural output expectations for 2025," WESP stated.

Although India's growth projection for this year slightly decreased from last year's 6.8%, it must be viewed in light of global economic sluggishness, with India maintaining its position as the fastest-growing economy.

The overall global growth rate remained at 2.8%, while developed economies saw a slight decline of 0.1% percent to 1.6% compared to the previous year.

This year's projection for China, the second fastest-growing economy, has dipped by 0.1% to 4.8% and is anticipated to drop 0.3% percent next year to 4.5%.

The US economy is projected to grow by 1.9% this year, down by 0.9% percent from the 2.8% percent recorded last year.

The UN's projection of a 6.6% percent growth rate for India this calendar year is slightly above the National Statistics Office of India's projection of 6.4% for 2024-25 released on Tuesday.

Regarding the region, Rashid commented that "the economic outlook for South Asia is mixed", exhibiting variations among the countries, with some performing well.

WESP forecasts the region's growth at 5.7% percent in 2025 and 6% percent in 2026, "driven by strong performance in India and the economic recovery in several other economies."

"Modest growth in economic activity is anticipated for Pakistan and Sri Lanka, with GDP expected to rise by 3.4% and 4% percent, respectively, as both countries continue to recover from the downturn experienced during 2022–2023," WESP noted.

This projection hinges on the resolution of debt issues in both nations.

"GDP in Bhutan and Nepal is forecasted to grow by over 5% in 2025, but Bangladesh's economy is expected to slow down due to unrest in mid-2024 and ongoing political uncertainty," it added, providing a growth forecast of 4.2% percent.

WESP warned that for the region, "risks to the outlook are tilted to the downside due to potential escalation of geopolitical tensions, deceleration in external demand, ongoing debt challenges, and social unrest."

"The region is also highly susceptible to climate hazards, as extreme weather events pose significant risks," it concluded.

The report anticipates that India's consumer price inflation will decrease slightly from an estimated 4.8% last year to 4.3% this year, "remaining within the 2 to 6 percent medium-term target range set by" the Reserve Bank of India.

It attributed the "adverse weather conditions" to the increased prices of vegetables, cereals, and other staples last year, which caused spikes in the country's headline inflation in June and September.

On the employment front, WESP reported that "indicators have remained strong throughout 2024, with labour force participation nearing record highs."

The urban unemployment rate in the second quarter of last year was 6.6% percent, "virtually unchanged from the rate of 6.7% percent recorded in 2023."

"While progress has been made in female labour market participation, significant gender gaps still persist," it concluded.