Is India Still the Fastest-Growing Economy at a 'Precarious Moment' for the World?

According to the United Nations on May 16, India continues to hold its position as the fastest-growing large economy, with an anticipated growth rate of 6.3 percent for this fiscal year, amidst a global economy that is facing a 'precarious moment.'

Ingo Pitterle, a senior officer in economic affairs, remarked on Thursday that, despite growth projections being revised down from 6.6 percent made in January to 6.3 percent for 2025, India’s economy remains robust due to strong private consumption and public investment.

The UN's mid-year update of the World Economic Situation and Prospects (WESP) report indicates that India’s economy is forecasted to expand slightly faster next year at 6.4 percent, although this is also 0.3 percent lower than earlier projections.

According to the report, the global economy is currently at a precarious moment.

There are rising trade tensions and policy uncertainties that have significantly hampered the global economic outlook for 2025.

Shantanu Mukherjee, the director of the Economic Analysis and Policy Division, expressed that it has been a tense period for the global economy.

In January, expectations were for two years of stable, albeit subpar growth, but since then, outlooks have diminished.

Against this backdrop, India’s growth, as the world’s fifth-largest economy, starkly contrasts with the global growth rate of 2.4 percent this year, along with other major economies.

China’s growth is projected at 4.6 percent, while the US is at 1.6 percent, Germany is projected at a negative -0.1 percent, Japan at 0.7 percent, and the European Union at 1 percent.

The report highlights that India's economic growth will be supported by resilient private consumption, significant public investment, and strong services exports.

On inflation and employment, the WESP report shows promising trends for India.

Inflation is expected to decrease from 4.9 percent in 2024 to 4.3 percent in 2025, remaining within the central bank's target range.

Unemployment is largely stable due to steady economic conditions, but there are ongoing concerns about persistent gender disparities in employment, emphasizing the need for greater inclusivity in workforce participation.

The WESP also pointed out risks to the export sector from threats of US tariffs.

While potential US tariffs could affect merchandise exports, certain currently exempt sectors—such as pharmaceuticals, electronics, semiconductors, energy, and copper—might mitigate the economic impact, although these exemptions may not be long-lasting.

Last month, the International Monetary Fund projected India's economy to grow by 6.2 percent this year and 6.3 percent next year.